Final answer:
A progressive distributional effect occurs when the burden of a tax falls more heavily on higher-income individuals or groups, while a regressive distributional effect occurs when the burden falls more heavily on lower-income individuals or groups. In the case of the given tax on gifts, it would be considered regressive.
Step-by-step explanation:
A progressive distributional effect occurs when the burden of a tax falls more heavily on higher-income individuals or groups. In other words, as income increases, the percentage of income paid in taxes also increases. On the other hand, a regressive distributional effect occurs when the burden of a tax falls more heavily on lower-income individuals or groups. This means that as income increases, the percentage of income paid in taxes decreases.
In the case of the given tax on gifts, it would be considered regressive. This is because the tax rate is lower for amounts up to $100,000 (10%) and higher for amounts above that (20%). Therefore, individuals with higher income who receive gifts above $100,000 would pay a lower percentage of their total income in taxes compared to individuals with lower income who receive gifts below $100,000.