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

The correct answer is B. rate of tax decrease as income increases

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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