![]() ![]() But, because the tax is not associated with income, the low-income group are severely affected by it, has they have to pay a higher share of their income as the tax on necessities. the tax is fairly imposed on all consumers regardless of their level of income, on the basis of what they own or purchase. The regressive tax is applied in a uniform manner, i.e. Simply put, the regressive tax is one in which high tax is collected from low-income earners and low from high-income earners. When the amount subject to taxation increases, the overall rate of tax decreases, then this taxing mechanism is said to be regressive. Whenever the income of the assessee crosses a particular slab, a higher income tax rate is imposed on his income. Further, it is based on the notion that individuals who earn more, have to pay more.įor example Income tax, wherein the income tax is divided into various slab rates, i.e. This taxing mechanism aims at reducing tax incidence of people, with lower income as the tax incidence is shifted on the people with higher income. Therefore, the taxpayers are divided on the basis of their level of income. ![]() high tax is collected from those who earn more and less from those whose income is low. In short, it is a tax system in which the tax rate depends on the person’s ability pay, i. ![]() A progressive tax is a tax system, in which the rate of tax goes up with a rise in the amount of tax. ![]()
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