Progressive Tax

This is the system of taxation where the marginal rate of tax increases as income increases. It takes a larger percentage of taxpayers’ income as income increases. Example includes Personal Income Tax.

Regressive Tax

This the system of taxation where the marginal rate of tax decreases as income increases. It takes a smaller percentage of taxpayers’ income as income increases. Example includes Consumption Taxes like Value Added Tax (VAT), Poll Tax which is levied at a fixed rate per person regardless of income, and Toll Duty.