A regressive tax imposes a relatively greater burden on lower-income groups through uniform tax rates that diminish purchasing power more substantially among less financially capable classes.
Structure:
Rates applied evenly across all taxpayers constitute a fixed percentage of each individual’s total consumption or similarly broad spending base.
Example:
Some local authority relied heavily on blanket sales taxes from inexpensive staples that risked straining limited budgets of low-wage families disproportionately to revenue needs.
Impact:
While raising funds efficiently, regressive models exacerbate inequality by absorbing a vastly higher percentage of earnings from the imperiled least wealthy rather than calibrating contributions according to ability to pay.