Title: The Pros & Cons of Regressive Taxation | Sapling
Headings: The Pros & Cons of Regressive Taxation
The Pros & Cons of Regressive Taxation
Freedom of Choice
Discouraging Consumption
Harming the Poor
Decreased Revenues

Content: If they wish to lower what they pay in taxes, they can elect to cut back on or discontinue the use of an item. Discouraging Consumption
A regressive tax may be used to discourage people to avoid the use of potentially harmful products. A so-called "sin tax" on products like tobacco, alcohol and pornographic materials may make it more difficult for users of these products to afford their purchase, especially those at the lower end of the economic scale who need every dollar just to get by. Governments and municipalities may implement these taxes on the assumption that there will still be enough consumption of the products to generate needed revenues. Advertisement
Harming the Poor
On the downside, a regressive tax system can be viewed as unfair because it places a greater burden on those at the lower end of the economic scale. An individual earning $20,000 a year pays the same dollar amount in taxes on a purchase as an individual earning $200,000 per year. The end result is that the lower a person's income, the greater the proportion of that income that must be paid in taxes. Decreased Revenues
Another potential disadvantage of regressive taxation is that needed tax revenues could decrease if consumption decreases. This may occur during difficult economic times when consumers cut back on spending out of necessity. An increase in an existing tax may also cause consumers to reconsider whether they really need the product or service.