A tax in which the burden falls relatively more heavily on low-income groups than on wealthy taxpayers; the opposite of a progressive tax.

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Multiple Choice

A tax in which the burden falls relatively more heavily on low-income groups than on wealthy taxpayers; the opposite of a progressive tax.

Understanding tax incidence: a regressive tax takes a larger share of income from those with lower incomes. The lower-income group must spend a bigger portion of their earnings on taxed goods and services, so the tax hits them harder. In contrast, a progressive tax charges higher rates as income rises, and a proportional tax applies the same rate to everyone. Since the burden described falls more heavily on low-income groups, this is a regressive tax.

Understanding tax incidence: a regressive tax takes a larger share of income from those with lower incomes. The lower-income group must spend a bigger portion of their earnings on taxed goods and services, so the tax hits them harder. In contrast, a progressive tax charges higher rates as income rises, and a proportional tax applies the same rate to everyone. Since the burden described falls more heavily on low-income groups, this is a regressive tax.

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