regressive tax

A tax structured so that the effective tax rate decreases as the tax base increases.

• With this type of tax, the percentage of income paid in taxes decreases as the taxpayer’s income increases. A flat tax (such as the typical sales tax) is usu. considered regressive — despite its constant rate — because it is more burdensome for low-income taxpayers than high-income taxpayers. A growing tax exemption also produces a regressive tax effect. Cf. progressive tax; flat tax. [Cases: Internal Revenue 3545–3552; Taxation 1061–1065. C.J.S. Internal Revenue §§ 331–333, 335, 358–361, 797; Taxation § 1698.]

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