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A proportional tax takes the same percentage of income no matter your income level. A progressive tax, on the other hand, takes a larger percentage of income as your income increases. An example of a proportional tax is the Medicare tax (everyone pays 1.45% of all income), while the U.S. income tax is an example of a progressive tax (higher incomes get bumped into higher tax brackets).

Many people believe sales taxes to be proportional because everyone pays the same rate, but because sales taxes only apply to spending rather than overall income they almost always turn out to be regressive.

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