Title: Regressive tax financial definition of Regressive tax
Headings: Regressive tax
Regressive tax
Regressive tax
Regressive Tax
regressive tax
Regressive tax.
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Content: Regressive tax financial definition of Regressive tax
Regressive tax
Also found in: Legal, Wikipedia . Regressive tax
A tax system that provides that average tax rates decrease with increases in individuals' income brackets. Copyright © 2012, Campbell R. Harvey. All Rights Reserved. Regressive Tax
A tax that is applied to all persons equally and therefore adversely affects persons with lower income. For example, if a city institutes a 5% sale tax on groceries, everyone who buys groceries (that is, everyone) must pay 5% extra. Because the poor and the lower middle class make less money than other classes, the extra 5% is more difficult for them to afford. As a result, regressive taxes are less popular among left-wing political groups. However, proponents argue that regressive taxes are fair, at least to a certain extent, because they do not punish success.