A
regressive tax is a
tax imposed in such a manner that the
tax rate decreases as the amount subject to taxation increases.
[1][2][3][4][5] "Regressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from high to low, so that the
average tax rate exceeds the
marginal tax rate.
[6][7] In terms of individual income and wealth, a regressive tax imposes a greater burden (relative to resources) on the
poor than on the rich: there is an inverse relationship between the tax rate and the taxpayer's ability to pay, as measured by assets, consumption, or income. These taxes tend to reduce the
tax burden of the people with a higher
ability to pay, as they shift the relative burden increasingly to those with a lower ability to pay.