Editing Tax (section)

====Proportional, progressive, regressive, and lump sum====
An important feature of tax systems is the percentage of the tax burden as it relates to income or consumption. The terms progressive, regressive, and proportional are used to describe the way the rate progresses from low to high, from high to low, or proportionally. The terms describe a distribution effect, which can be applied to any type of tax system (income or consumption) that meets the definition.
* A [[progressive tax]] is a tax imposed so that the [[effective tax rate]] increases as the amount to which the rate is applied increases.
* The opposite of a progressive tax is a [[regressive tax]], where the effective tax rate decreases as the amount to which the rate is applied increases. This effect is commonly produced where means testing is used to withdraw tax allowances or state benefits.
* In between is a [[proportional tax]], where the effective tax rate is fixed, while the amount to which the rate is applied increases.
* A lump-sum tax is a tax that is a fixed amount, no matter the change in circumstance of the taxed entity. This in actuality is a regressive tax as those with lower income must use a higher percentage of their income than those with higher income and therefore the effect of the tax reduces as a function of income.

The terms can also be used to apply meaning to the taxation of select consumption, such as a [[Luxury tax|tax on luxury goods]] and the exemption of basic necessities may be described as having progressive effects as it increases a tax burden on high end consumption and decreases a tax burden on low end consumption.<ref>{{cite web |url=https://www.irs.gov/app/understandingTaxes/jsp/whys/lp/IWT5L1lp.jsp |title=Internal Revenue Service |publisher=irs.gov |access-date=27 March 2009 |url-status=dead |archive-url=https://web.archive.org/web/20070816190910/https://www.irs.gov/app/understandingTaxes/jsp/whys/lp/IWT5L1lp.jsp |archive-date=16 August 2007}}</ref><ref>{{cite web |url=http://concise.britannica.com/ebc/article-9370763/luxury-tax |archive-url=https://archive.today/20120707094214/http://concise.britannica.com/ebc/article-9370763/luxury-tax |url-status=dead |archive-date=7 July 2012 |title=Luxury tax&nbsp;— Britannica Online Encyclopedia |publisher=Concise.britannica.com |access-date=27 March 2009 }}</ref><ref>{{cite journal |jstor=1813222 |title=Clothing Exemptions and Sales Tax Regressivity |first=Jeffrey M. |last=Schaefer |date=1 January 1969 |journal=The American Economic Review |volume=59 |issue=4 |pages=596–99}}</ref>