Question

What is a regressive tax system?

• A. Tax rate increases as income increases
• B. Tax rate remains constant regardless of income
• C. Tax rate falls as income increases
• D. Tax rate fluctuates randomly

Answer 1

Answer:

C. Tax rate falls as income increases

• In a regressive tax system, the percentage of tax paid decreases as the taxable income or tax base rises, meaning lower-income individuals pay a higher proportion of their income compared to higher earners.