A graduated tax, which is sometimes called a progressive tax, is any type of taxation where the rate increases as the amount being taxed increases. The United States uses a graduated income tax system, in which taxpayers pay higher rates depending on how much they earn every year in salary. While there are many reasons a country might use a graduated income tax system, the primary reason is that it places a lower tax burden on the taxpayers least able to afford it.
The terms graduated and progressive are used interchangeably when it comes it taxes. In the United States income tax system, the tax on income is considered in many small steps, where the rate of taxation changes slightly depending on how much a person earns. The tax needs to be graduated at many levels because if it isn't, a person may end up actually taking home less money if he or she earns more. For example, imagine that the tax rate for those earning between $40,000 and $50,000 was 20%, while the tax rate for those earning over $50,000 was 25%. If someone earned $50,000 in a year, he or she would pay $10,000 in taxes and take home $40,000 in a year. But imagine if that same person earned $52,000. In this case, he or she would pay 25% of $52,000 or $13,000, which would leave him or her with a net earnings of $39,000. Thus, by working to make an extra $2,000 in a year, the person in our example actually made $1,000 less at the end of the year. The graduated income tax system works to correct this by making the taxation levels increase steadily rather than in large chucks, which makes situations like this very unlikely. So get out there, make some money, and don't worry about being overtaxed by Uncle Sam!