MANAGEMENT

Detailed explanation-1: -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-2: -Consequently, the chief examples of specific regressive taxes are those on goods whose consumption society wishes to discourage, such as tobacco, gasoline, and alcohol. These are often called “sin taxes.”

Detailed explanation-3: -Sales tax is an indirect tax and is generally charged at the point of buy or exchange of certain taxable goods, charged as a percentage of the value of the product. The sales tax depends on the government in power and the individual policies enforced by it, generally being simple to calculate and collect.

Detailed explanation-4: -Excise taxes are particularly regressive. Households in the lowest one-fifth by income faced an average federal excise tax rate that is nine times greater than the average excise tax rate faced by the top 1 percent of households.