Difference between revisions of "Regressive tax"
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| − | + | A '''regressive tax''' is one in which everyone is assessed a fixed dollar amount or a fixed percentage, such as a sales tax. Essentially, a regressive tax causes those earning lower incomes to pay a greater percentage of their income. This acts as an incentive to force those earning lower incomes to work to earn higher incomes, thus reducing their effective [[tax rate]]. | |
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| + | [[Category:Economics]] | ||
Revision as of 12:10, July 1, 2010
A regressive tax is one in which everyone is assessed a fixed dollar amount or a fixed percentage, such as a sales tax. Essentially, a regressive tax causes those earning lower incomes to pay a greater percentage of their income. This acts as an incentive to force those earning lower incomes to work to earn higher incomes, thus reducing their effective tax rate.