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Tax Bracket

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Tax Bracket
The rate at which an individual is taxed due to a particular income level.
    
Tax brackets are set based on income levels; individuals with lower income levels are taxed at a lower rate than individuals with higher income levels. Tax brackets serve as cutoff points for given income Tax rates; therefore, if an individual's annual taxable income exceeds the cutoff point, that person is taxed according to the next Tax bracket.
    
Most countries Tax individual incomes using a system of Tax brackets. This structure implements what is referred to as a progressive Tax system, in which taxation progressively increases as an individual's income grows. This is in contrast with the flat Tax structure, in which all individuals are taxed at the same rate, regardless of their income levels.
    
Proponents of the use of Tax brackets and a progressive Tax system contend that individuals with High incomes are more able to pay income taxes while maintaining a High standard of living, while Low-income individuals struggle to meet their basic needs, and should be subject to less taxation.
    
Furthermore, the use of Tax brackets has an automatic stabilizing effect on an individuals' after-Tax income, as a decrease in salary is counteracted by a decrease in Tax rate, leaving the individual with a less substantial decrease in after-Tax income.
Posted by  Terrapinn Financial Training Pte Ltd
 
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