Whats the difference between degressive tax and regressive tax????
Dear Student,
Regressive tax is a tax where rate of tax decreases as the tax base increases.In regressive tax, total amount of tax increases on high income in absolute sense but in relative sense, tax rate declines on higher income. In regressive tax a high burden falls upon poor than on rich.
For example, Taxes on necessary items. because poor people spend their more income on necessary items and main burden of this tax falls on them.
This tax is unjust and inequitable .
Degressive Tax are the taxes which are mildly progressive , but not very steep, so that high income earners do not make huge sacrifice on the basis of equity.
In Degressive tax , tax payable increases only at diminishing rate.
The graph of regressive tax is downward sloping from left to right but the graph of degressive tax starts upward sloping and after a point it gets flat.
Hope this information will clear your doubts about this topic.
If you have any more doubts just ask on the forum and our experts will try to help you out as soon as possible.
Regards
Regressive tax is a tax where rate of tax decreases as the tax base increases.In regressive tax, total amount of tax increases on high income in absolute sense but in relative sense, tax rate declines on higher income. In regressive tax a high burden falls upon poor than on rich.
For example, Taxes on necessary items. because poor people spend their more income on necessary items and main burden of this tax falls on them.
This tax is unjust and inequitable .
Degressive Tax are the taxes which are mildly progressive , but not very steep, so that high income earners do not make huge sacrifice on the basis of equity.
In Degressive tax , tax payable increases only at diminishing rate.
The graph of regressive tax is downward sloping from left to right but the graph of degressive tax starts upward sloping and after a point it gets flat.
Hope this information will clear your doubts about this topic.
If you have any more doubts just ask on the forum and our experts will try to help you out as soon as possible.
Regards