Regressive Tax Law and Legal Definition

Regressive tax is a kind of tax that imposes higher tax on low income groups than groups of higher income. When the amount subject to taxation increases, the tax rates decreases. This is the principle behind regressive taxation. When the rich gets to pay only a smaller amount, the poor would have to pay a higher amount as tax. If the activity being taxed is more likely to be carried out by the poor and less likely to be carried out by the rich, then the tax may be considered regressive.