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What do you call.... (vent at my brain not working)

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Probably no real home for this on MSE but I am annoyed at my brain not working so thought here better than anywhere else

If you think of things with a banded scale, eg income tax, there are two ways these sorts of things can be applied (I'll use income tax as an easy example but we all know how it works in reality).... you can look at the income, see what tax percentage it is and apply that to the whole income or, as it actually works, you can apply the appropriate tax for each band as you go up the scale... I am sure there is a succinct way of describing these two options but cannot for the life of me remember what they are.

Comments

  • KP20
    KP20 Posts: 42 Forumite
    Fifth Anniversary 10 Posts
    From Wikipedia: the stepped income tax set up you've referred to is called a progressive tax system, where you have different rates as the income increases.

    I'd say the other one is a flat-rate tax system, eg. where you pay 20% on all income, no matter how little/much it is. 
  • Sandtree
    Sandtree Posts: 10,628 Forumite
    10,000 Posts Fourth Anniversary Name Dropper
    Thanks for the suggestion, the second isnt flat rate (eg where 20% applies to everyone) but where you still look up to see if its the 0%, 20%, 40% or 45% but then apply that percentage to the full amount (which isnt how income tax works). 

    PS. its the question is on the application of banded percentages and income tax is just an easy example that people will understand the stepped type where each percentage applies to its own band even if you are in a higher band
  • IvanOpinion
    IvanOpinion Posts: 22,586 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    tiered ???
    I don't care about your first world problems; I have enough of my own!
  • Andy_L
    Andy_L Posts: 13,006 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Progressive tax rates
    Flat rate tax
  • ceh209
    ceh209 Posts: 877 Forumite
    Part of the Furniture 500 Posts Name Dropper
    I'd call them:

    1) Effective (average) rate
    2) Marginal rate
    Excuse any mis-spelt replies, there's probably a cat sat on the keyboard
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