What is a Regressive Tax?
A regressive tax can be defined as a tax that tends to increase the total percentage of income paid on those who must pay the tax. In contrast, those who have a higher income pay less of their total income on items taxed. A tax can also be considered regressive when poorer folks must purchase more of the items taxed than do richer folks. An example of regressive tax can occur when people who are poorer live, as they tend to do in poorly insulated homes. Due to poor insulation, they may pay more money to heat or cool their homes, and pay a higher tax on the purchase of electricity and gas. Similarly a person with an old car that is a gas-guzzler may have to consume more gas and thus pay a higher proportion of their income on gas taxes, than does a person who is able to afford to purchase an energy efficient car or a hybrid vehicle. The wealthier person gets something of a tax advantage in these situations, making taxes on energy or fuel regressive in nature. The wealthier person may liv
