Question

How does a regressive taxation system work?
• A. It makes less wealthy citizens pay a higher percentage of their
income in taxes.
B. It makes all citizens pay the same percentage of their income in
taxes.
C. It requires all citizens to pay all of their income in taxes for
redistribution.
D. It makes wealthier citizens pay a higher percentage of their
income in taxes.


A .e

Answer 1

Regressive taxation makes less wealthy citizens pay a higher percentage of their income in taxes.

A regressive tax is one where average tax burden decreases with increasing income. That is why wealthy citizens pay less percentage of their income in taxes.

Examples of Regressive tax are

• Goods and services tax
• sales, gas
• social security payroll.

The regressive tax has more burden on the poor and less on the rich. Indirect taxes are regressive taxes.

The types of regressive taxes are:

• Sales taxes
• Property taxes
• Sin taxes
• Proportional taxes

Hence, the correct answer is Option A.

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