Principles of Taxation
Basic Concepts of Taxation
Marginal versus Average Tax Rates
- A regressive tax is a tax whose burden, expressed as a percentage of income, falls as income increases.
- Excise taxes (taxes on specific commodities) are regressive. The VAT is also regressive
- The average tax rate is the total amount of tax you pay divided by your total income.
- The marginal tax rate is the tax rate you pay on any additional income you earn.