Regressive Tax

A tax with a rate that decreases as the taxpayer's income increases.

The result of a regressive tax is that the lower-income taxpayer pays a larger percentage of his or her income in taxes than does the higher-income taxpayer. The opposite of the regressive tax is the progressive tax. With progressive taxes, such as the federal Income Tax, the effective tax rates increase as the taxpayer's income increases. The proportionate tax rate, also referred to as a flat tax rate, remains constant as income rises. Under a proportionate tax system, higher-income individuals pay a greater amount of taxes than lower-income individuals pay, but the ratio is identical.

Consumption taxes, which are taxes on consumer goods and services, are usually regressive because individuals with lower incomes spend a larger portion of their income on these goods and services than higher-income individuals do. Some examples of these consumption taxes are the taxes on alcohol and tobacco, also referred to as "sin taxes."

Some taxes can be a combination of the different tax rates. For example, the Social Security tax is proportional until the taxpayer reaches the maximum income level. However, once the taxpayer's income reaches the maximum cap, all income earned over the cap is not taxed. The result is a regressive tax because the individual earning in excess of the maximum income level is paying a lower percentage of her or his income in taxes than the lower-income individual is paying.

Cross-references

Taxation.

Regressive tax

A tax system that provides that average tax rates decrease with increases in individuals' income brackets.

Regressive Tax

A tax that is applied to all persons equally and therefore adversely affects persons with lower income. For example, if a city institutes a 5% sale tax on groceries, everyone who buys groceries (that is, everyone) must pay 5% extra. Because the poor and the lower middle class make less money than other classes, the extra 5% is more difficult for them to afford. As a result, regressive taxes are less popular among left-wing political groups. However, proponents argue that regressive taxes are fair, at least to a certain extent, because they do not punish success.

regressive tax

A tax that has a rate that declines as the amount to be taxed increases. In terms of income, federal and state taxation of cigarettes is regressive because low-income smokers pay a higher rate of taxation in terms of their income than high-income smokers do. A system of regressive taxation tends to free more funds for investment because high-income individuals tend to save a greater portion of their income. However, a regressive tax is often considered socially and politically unacceptable. Compare progressive tax.

Regressive tax.

A regressive or flat income tax system taxes everyone at the same rate, as sales tax does.

Advocates say it's simpler and does away with the kinds of tax breaks that tend to favor the wealthy. Opponents say that middle-income taxpayers carry too large a proportion of the total tax bill.

单词	regressive tax
释义	Regressive Tax Regressive Tax A tax with a rate that decreases as the taxpayer's income increases. The result of a regressive tax is that the lower-income taxpayer pays a larger percentage of his or her income in taxes than does the higher-income taxpayer. The opposite of the regressive tax is the progressive tax. With progressive taxes, such as the federal Income Tax, the effective tax rates increase as the taxpayer's income increases. The proportionate tax rate, also referred to as a flat tax rate, remains constant as income rises. Under a proportionate tax system, higher-income individuals pay a greater amount of taxes than lower-income individuals pay, but the ratio is identical. Consumption taxes, which are taxes on consumer goods and services, are usually regressive because individuals with lower incomes spend a larger portion of their income on these goods and services than higher-income individuals do. Some examples of these consumption taxes are the taxes on alcohol and tobacco, also referred to as "sin taxes." Some taxes can be a combination of the different tax rates. For example, the Social Security tax is proportional until the taxpayer reaches the maximum income level. However, once the taxpayer's income reaches the maximum cap, all income earned over the cap is not taxed. The result is a regressive tax because the individual earning in excess of the maximum income level is paying a lower percentage of her or his income in taxes than the lower-income individual is paying. Further readings Congressional Research Service. 1990. Would a Social Security Tax Cut Increase Progressivity? CRS 90-235 RCO. Washington, D.C.: Congressional Research Service. Howard, Jay M. 1992. "When Two Tax Theories Collide: A Look at the History and Future of Progressive and Proportionate Personal Income Taxation. Washburn Law Journal 32. Samuels, Leslie B. 1995. "Remarks of Leslie B. Samuels." Federal Bar Association Section of Taxation Report 11. Cross-references Taxation. Regressive tax Regressive tax A tax system that provides that average tax rates decrease with increases in individuals' income brackets. Regressive Tax A tax that is applied to all persons equally and therefore adversely affects persons with lower income. For example, if a city institutes a 5% sale tax on groceries, everyone who buys groceries (that is, everyone) must pay 5% extra. Because the poor and the lower middle class make less money than other classes, the extra 5% is more difficult for them to afford. As a result, regressive taxes are less popular among left-wing political groups. However, proponents argue that regressive taxes are fair, at least to a certain extent, because they do not punish success. regressive tax A tax that has a rate that declines as the amount to be taxed increases. In terms of income, federal and state taxation of cigarettes is regressive because low-income smokers pay a higher rate of taxation in terms of their income than high-income smokers do. A system of regressive taxation tends to free more funds for investment because high-income individuals tend to save a greater portion of their income. However, a regressive tax is often considered socially and politically unacceptable. Compare progressive tax. Regressive tax. A regressive or flat income tax system taxes everyone at the same rate, as sales tax does. Advocates say it's simpler and does away with the kinds of tax breaks that tend to favor the wealthy. Opponents say that middle-income taxpayers carry too large a proportion of the total tax bill.
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Regressive Tax

Regressive Tax

Further readings

Cross-references

Regressive tax

Regressive tax

Regressive Tax

regressive tax

Regressive tax.