Question

You pay $2,000 in taxes on an income of $20,000, and a tax of $2,700 on an income of $30,000, then over this range of income the tax is

Answer 1

In this case the income tax would be regressive. Regressive tax is when the amount of tax charged decreases as the taxable income increases. For example in our case, at $20,000, $2,000 in taxes means a 10% tax rate. At $30,000, a tax of $2,700 means a 9% tax rate. As the taxable income goes up, the tax goes down.