ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Regressive tax implies a system where the tax rate goes down as the taxable income increases. That’s because the tax is levied uniformly regardless of the income. This benefits the high income earners as they have to pay lesser tax whereas the low income earners are taxed at a higher rate..

Detailed explanation-2: -Sales and excise taxes are the most regressive element in most state and local tax systems. Sales taxes inevitably take a larger share of income from low-and middle-income families than from rich families because sales taxes are levied at a flat rate and spending as a share of income falls as income rises.

Detailed explanation-3: -Taxes like sales tax, fuel tax, excise tax, social security payroll fall under the purview of regressive taxes.

Detailed explanation-4: -What is Regressive Tax. Definition: Under this system of taxation, the tax rate diminishes as the taxable amount increases. In other words, there is an inverse relationship between the tax rate and taxable income. The rate of taxation decreases as the income of taxpayers increases.

Detailed explanation-5: -Regressive taxes place more burden on low-income earners. They take a higher percentage of income on the poor than on high-income earners.