A regressive tax is characterized by a decrease in the tax rate as the amount subject to taxation increases. This means that individuals with lower incomes pay a higher percentage of their income in taxes compared to those with higher incomes, making option D the correct answer.

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A Regressive Tax Is

Question 27

Multiple Choice

A regressive tax is:

A) unconstitutional.
B) based on the average income an individual earned over several prior years.
C) one where low taxes are imposed on consumers, and higher taxes are imposed on manufacturers.
D) one where the percentage of income taxed is inversely related to the size of the taxpayer's income.

Correct Answer: