Which taxation concept describes taxation that hits lower-income brackets more heavily?

• A. Progressive Taxation
• B. Regressive Taxation
• C. Flat Tax
• D. Value-Added Tax

Answer: (B)

Regressive taxation describes a tax system where the burden falls more heavily on those with lower incomes. Even if the tax rate is the same for everyone, low-income earners end up spending a larger share of their income on taxed goods and services and have less capacity to absorb the cost, so their effective tax rate is higher relative to their income. This contrasts with a progressive system, which places higher rates on higher incomes, and a flat tax, which charges the same rate to all regardless of income. A value-added tax is a consumption tax applied at different stages of production; while its effects can be regressive in practice because poorer households spend more of their income on taxed goods, the standard way this question frames the burden across income levels points to regressive taxation.