Which of the following statements accurately describes a regressive tax?
A)A tax which results in higher effective tax rates for higher income taxpayers.
B)A tax which results in lower effective tax rates for higher income taxpayers.
C)A tax in which the same effective rate applies to all levels of income.
D)A tax that is shifted to consumers through price increases on the goods purchased.

Question

Quizplus · Accepted Answer

A regressive tax means that as income increases, the effective tax rate decreases. This means that higher income taxpayers pay a smaller percentage of their income in taxes compared to lower income taxpayers. This is the opposite of a progressive tax where higher income taxpayers pay a higher percentage of their income in taxes.

Which of the Following Statements Accurately Describes a Regressive Tax