Question

Which, if any, of the following taxes are regressive (rather than progressive)?

a. Federal individual income tax
b. Federal estate tax
c. Federal gift tax
d. State general sales tax

Answer 1

The federal gift tax in the given example is regressive.

Step-by-step explanation:

A regressive tax is one where those with high income pay a lower share of income in taxes than those with lower incomes. In the case of the federal gift tax in the provided example, the tax rate is 10% for amounts up to $100,000 and 20% for anything over that amount.

Since the tax rate remains the same regardless of income level, this tax would be considered regressive.