![]() For example, sales taxes are an example of regressive tax because the same amount of tax is paid by everyone, regardless of their income. However, there are also a number of regressive taxes that are assessed at the federal, state and local levels. ![]() Tax brackets group taxpayers by income ranges, and high-income taxpayers pay a larger share of the overall tax burden than low-income taxpayers. For example, our income tax system is progressive because it imposes a lower tax rate on low-income earners than on those with a higher income. Most nations, including the U.S., feature both progressive and regressive tax systems. ![]() High-income taxpayers end up paying a disproportionately higher share of taxes while low- and middle-income taxpayers pay a lower share of taxes. Under a progressive tax system, taxes are based on a taxpayer’s ability to pay.Īs a result, the average tax burden increases along with a taxpayer’s income. A progressive tax is one of two main types of tax systems used by a country. ![]()
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