Question

What is the difference between progressive and regressive methods of taxation? Explain.

Answer 1

[AI-generated answer — Bot GPT 3.5]

Progressive taxation is a system where individuals or entities with higher incomes are taxed at higher rates, compared to those with lower incomes. The idea behind progressive taxation is to distribute the tax burden more equitably, taking into consideration the ability to pay. This system is often based on the principle that individuals with higher incomes can afford to pay more in taxes, while those with lower incomes may struggle to do so.

Regressive taxation, on the other hand, is a system where individuals or entities with lower incomes are taxed at higher rates, while those with higher incomes are taxed at lower rates. This type of taxation system tends to place a greater burden on lower-income individuals, as a higher percentage of their income goes towards taxes. Regressive taxation can exacerbate income inequality and may be seen as unfair or unjust by some.

In summary, progressive taxation seeks to tax higher incomes at higher rates to achieve a more equitable distribution of the tax burden, while regressive taxation taxes lower incomes at higher rates, potentially increasing income inequality.