A tax is regressive if the
- rate of tax is constant at all income levels
-
rate of tax decrease as income increases
- rate of tax increases as income increases
- tax is direct rather than indirect
The correct answer is: B
Explanation
A regressive tax is a tax applied uniformly, taking a larger percentage of income from low-income earners than from high-income earners. Regressive taxes place more burden on low-income earners. Since they are flat taxes, they take a higher percentage of income on the poor than on high-income earners.
The taxable rate reduces as income increases, and it increases as income decreases.