A payroll tax taxes a worker's wages at 14 percent until the worker earns $60,000 per year.All labor earnings in excess of $60,000 are not subject to tax.The tax rate structure of the payroll tax is therefore:

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A regressive tax means the tax rate decreases as the taxable amount increases. In this case, the payroll tax is regressive because the tax rate is 14% until the worker earns $60,000 per year, but any labor earnings in excess of $60,000 are not subject to tax. Therefore, workers with higher incomes pay a lower percentage of their income in payroll taxes compared to workers with lower incomes, making this tax structure regressive.

A Payroll Tax Taxes a Worker's Wages at 14 Percent