Question

Difference between progressive and regressive tax system

Answer 1

Progressive taxis a tax culture in which the redistribution of income is taken into consideration. It means the rich pay more tax as compared to the poor. Such arrangement is made in form of your Income and hence there are slabs according to which you are taxed. Example of such taxes areDirect TaxRegressive taxis something which does not take care of the financial condition of the person who pays the tax. Hence there is nodiscrimination between the rich or the poor. Example of such taxes areService Tax.

Answer 2

A progressive tax is defined as a taxwhose rate increases as the payer's income increases. That is, individuals who earn high incomes have a greater proportion of their incomes taken to pay the tax. A regressive tax, on the other hand, is one whose rateincreases as the payer's income decreases.