Regressive tax

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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.

References in periodicals archive ?
We've been saying for some time that we believe APD is having a detrimental effect on the economy and is a regressive tax, so we are very pleased with the report that demonstrates our view was right," he said.
Council tax is a regressive tax and any rise disproportionately affects the poorer residents in the borough.
Recent hike proves that regressive tax regime has failed to deliver, tax evasion is on the rise and expanses of the rulers are crossing limits which have contributed to record low growth rate since coalition came into power, he added.
GRIM Shadow treasury minister Owen Smith said: "This independent report confirms what Labour have always argued but which out-of-touch ministers continue to deny - VAT is a regressive tax which hits the poorest harder than the richest.
This study examined whether children living in states with more progressive state tax codes were healthier than children who were living in states with more regressive tax codes.
Higher gas prices amount to a regressive tax increase on the American consumer, with all that implies for the ability of the U.
The Arkansas State Chamber of Commerce/Associated Industries of Arkansas has been instrumental in previous legislative sessions in helping get this regressive tax rate reduced, and we applaud members of the Legislature who are working to complete this important task.
EUR[pounds sterling]It would be a great shame if Spain implemented the same regressive tax policy.
This is an unfair and regressive tax hike that is hitting millions of hard-working Scots families in the pocket.
We've got one of the most regressive tax systems in this state," Jensen said.
Although the Government's emergency Budget contained measures heavily influenced by the Liberal Democrat manifesto, such as raising the income tax threshold, it also increased VAT to 20 per cent - even though VAT is regarded as a regressive tax which hits the least wealthy more than the richest.
Since then, this regressive tax, which takes no account of the ability to pay, has stifled and undermined the development of small and medium-sized businesses throughout Wales, and it is Plaid in coalition government in Cardiff that is left to pick up the pieces.