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For the regressive tax rate structure, what is the relationship between the tax base and the marginal tax rate?

User Dbgrman
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Final answer:

In a regressive tax structure, a higher income results in a lower marginal tax rate, meaning lower-income earners pay a higher proportion of their income in taxes compared to higher earners.

Step-by-step explanation:

For a regressive tax rate structure, the relationship between the tax base and the marginal tax rate is inverse; as the tax base (income) increases, the marginal tax rate decreases. This means that the percentage of income paid in taxes will be lower for those with higher incomes. A regressive tax system places a higher relative burden on lower-income earners, as they pay a higher proportion of their income in taxes compared to higher-income earners. In contrast, a progressive tax system, which is in place in the U.S., structures the tax brackets such that individuals with higher incomes pay a higher marginal tax rate on additional income earned.

User Kristen Balhoff
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