Title: Difference Between Progressive and Regressive Tax (with Comparison Chart) - Key Differences
Headings: Difference Between Progressive and Regressive Tax
Difference Between Progressive and Regressive Tax
Content: Progressive Tax Vs Regressive Tax
Comparison Chart
Definition of Progressive Tax
Definition of Regressive Tax
Key Differences Between Progressive and Regressive Tax
Conclusion

Content: Therefore, the taxpayers are divided on the basis of their level of income. This taxing mechanism aims at reducing tax incidence of people, with lower income as the tax incidence is shifted on the people with higher income. Further, it is based on the notion that individuals who earn more, have to pay more. For example Income tax, wherein the income tax is divided into various slab rates, i.e. Whenever the income of the assessee crosses a particular slab, a higher income tax rate is imposed on his income. Definition of Regressive Tax
When the amount subject to taxation increases, the overall rate of tax decreases, then this taxing mechanism is said to be regressive. Simply put, the regressive tax is one in which high tax is collected from low-income earners and low from high-income earners. The regressive tax is applied in a uniform manner, i.e. the tax is fairly imposed on all consumers regardless of their level of income, on the basis of what they own or purchase. But, because the tax is not associated with income, the low-income group are severely affected by it, has they have to pay a higher share of their income as the tax on necessities. Therefore, the incidence of the tax, falls more on poor people than on rich, as the relationship between tax payer’s ability and the rate of tax is inverse. For example, Value Added Tax charged fairly to all customers, but lower section of society is highly affected by it.