Title: Regressive Tax Definition
Headings: Regressive Tax
Regressive Tax
What Is a Regressive Tax?
Regressive Tax
Key Takeaways
Understanding Regressive Taxes
Sales Taxes
User Fees
Property Taxes
Flat Taxes
"Sin" Taxes

Content: Although the United States has a progressive taxation system when it comes to income tax, meaning higher income earners pay a higher percentage of taxes each year compared to those with a lower income, we do pay certain levies that are considered to be regressive taxes. Some of these include state sales taxes, user fees, and to some degree, property taxes. A regressive tax system is more common in less developed countries, where there may be a greater number of people in the same income bracket, thus reducing the negative impact of the regressive tax. Sales Taxes
Governments apply sales tax uniformly to all consumers based on what they buy. Even though the tax may be uniform (such as a 7 percent sales tax ), lower-income consumers are more affected. For example, imagine two individuals each purchase $100 of clothing per week, and they each pay $7 in tax on their retail purchases. The first individual earns $2,000 per week, making the sales tax rate on her purchase 0.35 percent of income. In contrast, the other individual earns $320 per week, making her clothing sales tax 2.2 percent of income. In this case, although the tax is the same rate in both cases, the person with the lower income pays a higher percentage of income, making the tax regressive. User Fees
User fees levied by the government are another form of regressive tax.