Title: Regressive tax - Wikipedia
Headings: Regressive tax
Regressive tax
Contents
Examples
See also
Notes
External links

Content: The opposite of a regressive tax is a progressive tax, in which the average tax rate increases as the amount subject to taxation rises In between is a flat or proportional tax, where the tax rate is fixed as the amount subject to taxation increases. Contents
1 Examples
2 See also
3 Notes
4 External links
Examples
Poll taxes
Lump-sum tax
A tax with a cap, above which no taxes are paid. So-called " sin taxes " ( pigovian taxes) have also been criticized for being regressive, as they are often consumed more (or at least at a greater proportion) by the lower classes. Such taxes are often imposed at a flat rate so they will make up a greater proportion of the final price of cheaper brands, compared to the higher-quality products generally consumed by the wealthy. For example, "people in the bottom income quintile spend a 78% larger share of their income on alcohol taxes than people in the top quintile." Tobacco in particular is highly regressive, with the bottom quintile of income paying an effective rate 583% higher than that of the top quintile. An allowance reduction in an income tax system allows for an individual's personal allowance to be withdrawn, making a higher marginal tax for a limited band before returning to the underlying rate. In the UK, there is an effective 60% band at £100,000, which returns to 40% at £120,000. Non-uniform excise taxation based on everyday essentials like food ( fat tax, salt tax ), transport ( fuel tax, fare hikes for public transport), energy ( carbon tax) and housing ( council tax, window tax) is frequently regressive on income. The income elasticity of demand of food, for example, is usually less than 1 (inelastic) ( see Engel's law) and therefore as a household's income rises, the tax collected on the food remains almost the same.