Question

Regressive tax is the form of tax in which ______.

पर्याय

• the rate decreases as the taxpayer’s income increases

• the rate increases with increase in income

• the rate remains same with increase in income

• the rate increases initially and decreases subsequently with increase in income

Answer 1

Regressive tax is the form of tax in which the rate decreases as the taxpayer’s income increases.

Explanation:

A regressive tax system creates an inverse relationship between the tax rate and a taxpayer’s earnings, meaning the effective tax burden falls as income rises. Although uniform consumption levies like sales tax or GST apply the same flat percentage to everyone, they consume a much larger proportion of a low-income earner’s disposable income than that of a wealthy individual.