Progressive, Regressive and Proportional Taxes-Financial Literacy

New Jersey Tax Brackets 6 tax brackets

1.4%, 1.75%, 3.5%, 5.53%, 6.37% and 8.97%

There are 7 federal income tax brackets

10%, 12%, 22%, 24%, 32%, 35%, and 37%

Sales tax

A tax on things you buy imposed by the state (some specific exceptions like unprepared food and clothing.)

Progressive tax

A tax that takes a larger percentage of income from high-income groups than from low-income groups.

Regressive tax

A tax that takes a larger percentage of income from low-income groups than from high-income groups.

Proportional tax

A tax that takes the same percentage of income from all income groups.

Vertical equity

The concept that people in different income groups should pay different rates of taxes or different percentages of their incomes as taxes. "Unequals should be taxed unequally."

Excise tax

Taxes on specific goods imposed by federal, state or local governments. The most common examples are luxury goods, gasoline or those that have been linked to specific health issues like cigarettes, alcohol and tanning salons.