Progressive and Regressive Tax Flashcards

1️⃣ Familiarise yourself with the flashcards:

  • Look through all the flashcards to see what's on both sides.
  • Make sure you understand the information on each card. If something's unclear, click the link to the revision notes at the bottom of the page for more details.

2️⃣ Test yourself:

  • Look at the question or prompt on each card and try to remember the answer before flipping it over.
  • Check the answer and make a note of any cards you find challenging and need to go over more.

3️⃣ Consistently Review and Practice:

  • Use spaced repetition: spend more time on the cards you struggle with and go over them more often.
  • Regularly review all the flashcards to help you better understand and retain the information over time.

Note: We may include questions that have multiple correct answers. It's useful to remember specific examples to understand these concepts better.

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What is a progressive tax?

A tax where the percentage of your income paid in tax rises as your income rises.

What is a regressive tax?

A tax where the percentage of your income paid in tax falls as your income rises.

What does 'average tax rate' mean?

It is your total tax paid as a share of your income, shown as a percentage.

How do you check if a tax is progressive?

Compare average tax rates. If higher earners pay a higher percentage than lower earners, it is progressive.

If Jade earns £15,000 and pays 8% tax, and Omar earns £60,000 and pays 5%, what type of tax is this?

Regressive, because the higher earner pays a smaller share of income in tax.

Name one UK tax that is usually progressive and why.

Income Tax, because tax rates are higher in higher income bands.

Name one UK tax that is often regressive in effect and why.

VAT, because low-income households spend more of their income, so pay a higher share.

How do progressive taxes affect income inequality after tax?

They can reduce inequality by taking a larger share from higher earners.

How can regressive taxes affect low-income households?

They take a bigger share of a low income, leaving less money for basic needs.

Why might a government still use some regressive taxes?

They are simple to collect and raise steady revenue. They can also discourage harmful goods.

What is the 'ability to pay' idea behind progressive tax?

People with higher incomes can afford to pay a larger share in tax than those with low incomes.

How can VAT be made less regressive?

Keep zero or reduced rates on essentials, so low-income households pay less tax on basics.

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