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The Whys of Taxes

Theme 3: Fairness in TaxesLesson 2: Regressive Taxes

 

Billboard that says 'Welcome to Regressia
A regressive tax may at first appear to be a fair way of taxing citizens because everyone, regardless of income level, pays the same dollar amount. By taking a closer look, it is easy to see that such a tax causes lower-income people to pay a larger share of their income than wealthier people pay. Though true regressive taxes are not used as income taxes, they are used as taxes on tobacco, alcohol, gasoline, jewelry, perfume, and travel.

User fees often are considered regressive because they take a larger percentage of income from low-income groups than from high-income groups. These include fees for licenses, parking, admission to museums and parks, and tolls for roads, bridges, and tunnels.

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How does a regressive tax impact lower income groups?


tax trivia
Did You Know?
1950's style black and white television People in the United Kingdom (U.K.) pay a tax that is unheard of in the United States. They pay their government a single license fee that covers all TV sets used by one family or a household living communally at an address!

Who has to pay? All United Kingdom residents under the age of 75 must pay for TV licenses, though citizens who are legally blind pay only 50 percent of the full fee.

Test your tax trivia knowledge by answering the following multiple-choice question. Click on the correct answer. To assess your answer, click the Check My Answers button.
How much do you think the U.K.'s color TV licensing fee is (in U.S. dollars)?
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