A tax is regressive if the
ECONOMICS
WAEC 2011
A tax is regressive if the
- A. rate of tax is constant at all income levels
- B. rate of tax decrease as income increases
- C. rate of tax increases as income increases
- D. tax is direct rather than indirect
Correct Answer: B. rate of tax decrease as income increases
Explanation
A regressive tax is a tax applied uniformly, taking a larger percentage of income from low-income earners than from high-income earners. Regressive taxes place more burden on low-income earners. Since they are flat taxes, they take a higher percentage of income on the poor than on high-income earners. The taxable rate reduces as income increases, and it increases as income decreases
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