Tax levied at a rate that increases as the quantity subject to taxation increases.
Designed to collect a greater proportion of tax revenue from wealthy people, progressive taxes reflect the view that those who are able to pay more should carry a heavier share of the tax burden. Progressive inflation or recession because the amount of tax revenue changes more than proportionately with an increase or decrease in income. For example, in an inflationary economy, as prices and incomes rise, a greater percentage of taxpayers' income goes toward taxes. Government revenues increase, and the government has more leverage over the economy. A side effect of this system is that lower-income taxpayers have an especially difficult time making ends meet when inflation is high. To compensate, many economists advocate indexation ; several countries adjust their tax rates annually in times of inflation, usually in line with the consumer price index . See also {{link=regressive tax">regressive tax .