Difference between revisions of "Regressive tax"
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Revision as of 17:21, December 25, 2009
A regressive tax is when everyone is taxed a fixed dollar amount, or fixed percentage such as 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.
