- Tax levied at a rate that decreases as its base increases.Regressivity is considered undesirable because poorer people pay a greater percentage of their income in tax than wealthier people. Consumption taxes and sales taxes are usually considered regressive because of their set rate structures. Tobacco, gasoline, and liquor sales taxes, all major sources of tax revenue, are the most regressive taxes. In an effort to limit regressivity, a number of U.S. states have exempted medicine and grocery items from sales tax. Although the property tax is sometimes judged regressive because poorer people spend a larger percentage of their income on housing than wealthier people, property taxes are nonetheless effective in redistributing wealth from higher to lower income groups. See also progressive tax.
* * *tax that imposes a smaller burden (relative to resources) on those who are wealthier; its opposite, a progressive tax, imposes a larger burden on the wealthy. A change to any tax code that renders it less progressive is also referred to as regressive. If regressivity is part of a proposed tax, it can often become the focus of a political argument against that tax, even if regressivity is a by-product rather than the intention of the tax. Consequently, the chief examples of specific regressive taxes are those on goods whose consumption society wishes to discourage, such as tobacco, gasoline, and alcohol. These are often called “sin taxes.”Most economists agree that the regressivity or progressivity of any specific tax is of minor economic importance; what matters is the degree of progressivity of the tax system as a whole. This is why even economists who advocate a steeply progressive overall tax system might support a tax on gasoline as a way of reducing pollution; if the gasoline tax is an efficient way of reducing pollution, its modest contribution to overall regressivity can be easily offset by more progressive wage or income taxes.However, any regressivity stemming from broad-based consumption taxes (consumption tax)—such as a general sales tax or a value-added tax—can be hard to offset if a government raises a large proportion of its total revenues through these taxes. Consumption taxes are generally considered to be regressive because studies have shown that wealthier people spend a smaller proportion of their incomes. (A full analysis, however, must take into account any future consumption taxes that will ultimately be paid when the savings of the rich are eventually consumed.) To mitigate this perceived regressivity, consumption taxes are often levied at lower rates on goods perceived as necessities (such as food and clothing), while higher rates are levied on goods perceived as luxuries (such as jewelry and yachts).
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regressive tax — UK US noun [countable] [singular regressive tax plural regressive taxes] a tax system in which poor people pay a bigger percentage of their income than rich people Thesaurus: types of tax and taxationhyponym … Useful english dictionary
regressive tax — A tax with a rate that decreases as the taxpayer s income increases. Dictionary from West s Encyclopedia of American Law. 2005. regressive tax A tax with a rate that decreases as the taxpayer s income i … Law dictionary
Regressive tax — A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. [ [http://www.merriam webster.com/dictionary/Regressive Webster] (3): decreasing in rate as the base increases (a… … Wikipedia
regressive tax — A tax system that provides that average tax rates decrease with increases in individuals income brackets. Bloomberg Financial Dictionary * * * regressive tax regressive tax ➔ tax1 * * * regressive tax UK US noun [C] TAX ► a tax in which poor… … Financial and business terms
Regressive Tax — A tax that takes a larger percentage from low income people than from high income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower income individuals harder. Some examples include gas tax and… … Investment dictionary
regressive tax — UK / US noun [countable] Word forms regressive tax : singular regressive tax plural regressive taxes a tax system in which poor people pay a bigger percentage of their income than rich people … English dictionary
regressive tax — A tax in which the rate of tax decreases as income increases. Indirect taxes fall into this category. Regressive taxes are said to fall more heavily on the poor than on the rich; for example, the poor spend a higher proportion of their incomes on … Big dictionary of business and management
regressive tax — Fin a tax whose percentage falls as the value of the item being taxed, especially income, rises. U.S. social security taxes are regressive. See also progressive tax, proportional tax … The ultimate business dictionary
regressive tax — 1. A *taxation system in which *tax rates decrease with higher levels of taxable income. Contrast *progressive tax. 2. A *taxation system which is considered to favor the wealthy and cause hardship to poorer individuals. For example, a taxation… … Auditor's dictionary
regressive tax — re gressive .tax n a tax that has less effect on the rich than on the poor … Dictionary of contemporary English