tax rate
Definition
The percent of income paid as tax, or the percent of the value of a good, service or asset paid as tax. This is different from the applicable marginal tax rate, which is the tax rate applicable on the last dollar. Tax rates can be classified as one of three types: progressive tax, proportional, or regressive. A progressive tax is one in which the percent paid as tax rises as the amount rises (for example, personal income tax in many countries). A proportional tax is one in which the percent paid as tax stays the same as the amount rises (for example, sales tax, or corporate income tax in some countries). A regressive tax is one in which the percent paid as tax falls as the amount rises (for example, value added tax in some cases). Thus, a person's applicable tax rate will depend on how much of each type of tax he/she pays as part of his/her total tax burden.
