Since they are flat taxes, they take a higher percentage of income on the poor than on high-income earners. Taxes on most consumer goods, sales, gas, and Social Security payroll are examples of regressive taxes. Pigouvian and sin taxes are specific types of regressive taxes.

Answer: D) The tax that charges raised-income earners a lower portion than low-income earners. Explanation: A regressive tax is commonly a tax that is applied equally, which means it affects lower-income individuals more, with regressive tax the rate of tax decrease as the income rise.

Regressive tax. a tax for which the percentage of income paid in taxes decreases as income increases. Withholding. taking tax payments out of an employee’s pay before he or she receives it. Tax return.

Two of these systems impact high- and low-income earners differently. Regressive taxes have a greater impact on lower-income individuals than the wealthy. Proportional tax, also referred to as a flat tax, affects low-, middle-, and high-income earners relatively equally.

progressive tax—A tax that takes a larger percentage of income from high-income groups than from low-income groups. proportional tax—A tax that takes the same percentage of income from all income groups. regressive tax—A tax that takes a larger percentage of income from low-income groups than from high-income groups.

Reasons for regressive taxes Income tax may discourage people from working. A poll tax will not affect economic behaviour. A regressive tax may be placed in order to reduce demand for demerit goods / good with negative externalities. For example, a tobacco tax is designed to reduce demand for cigarettes.

Disadvantages of Regressive Tax

• Inequality. A regressive tax imposes a higher tax burden on those with lower incomes than those at higher incomes.
• Higher Prices. It goes without saying that the higher the tax, the higher the price.
• Reduces Choice.
• Political Unrest.

In the case of regressive tax, the tax rate decreases with increase in income. Here, the tax liability of the taxpayer decreases with increase in his income. Or in other words, the proportion of his income to be paid as tax decreases with increase in income.

Not all taxes within the federal system are equally progressive. Some federal taxes are regressive, as they make up a larger percentage of income for lower-income than for higher-income households. The individual and corporate income taxes and the estate tax are all progressive.

Taxes other than the income tax (for example, taxes on sales and payrolls) tend to be regressive. Hence, making the income tax flat could result in a regressive overall tax structure. Under such a structure, those with lower incomes tend to pay a higher proportion of their income in total taxes than the affluent do.

a tax in which the rate of tax is higher on larger amounts of money: In a progressive tax system, rich people pay a higher percentage of their income as taxes than do poor people.

Overall, a proportional tax system places a larger financial burden on lower earners. Although technically everyone is paying the same percentage of their taxable income, that rate will have a larger effect on those who are starting with less. For instance, imagine a system in which the proportional tax rate is 10%.

Supporters of the progressive system claim that higher salaries enable affluent people to pay higher taxes and that this is the fairest system because it lessens the tax burden of the poor.

The Fair Tax Plan is a sales tax proposal that would replace the current U.S. income tax structure. It abolishes all federal personal and corporate income taxes, as well as the alternative minimum tax. It ends taxes on gifts, estates, capital gains, Social Security, Medicare, and self-employment.