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Regressive Tax Definition
Examples, Advantages, and Disadvantages
What is a Regressive Tax
Key Points
Examples of Regressive Tax
1. Sales Tax
2. Property Tax
3. Excise Tax
4. Tariff
5. Government Fees
Advantages of Regressive Tax
1. Encourages people to earn more
2. Higher Revenues
3. Increases Savings and Investment
4. Simplicity
5. Reduces a ‘Brain Drain’
Disadvantages of Regressive Tax
1. Inequality
2. Higher Prices
3. Reduces Choice
4. Political Unrest
Related Topics
General FAQs on Regressive Tax
Further Reading

Content: All that work and effort, only for half their income to be taken away. As a result, they may look to other nations that provide a more regressive tax system that is objectively fairer. Disadvantages of Regressive Tax
1. Inequality
A regressive tax imposes a higher tax burden on those with lower incomes than those at higher incomes. Therefore, it creates a downwards pressure on the number of local income households can save. They are forced into paying a higher percentage of their incomes in tax, thereby leaving less for them to save. With lower savings, it becomes difficult to get onto the housing ladder and gain equity through the property. In turn, a poverty trap is created whereby low-income households are burdened by taxes – preventing them from accumulat