Regressive tax
[9] By the late 20th century most major economies severed the practice (e.g. twenty-fourth amendment or council tax).
Perhaps the most notable example of public's dissatisfaction with poll taxes is the Community Charge implemented by Margaret Thatcher.
The handling of the tax system transmission and the aftermath of inept government intervention became subject to mass criticism.
Negative impacts of the poll tax disproportionally fell on lower income groups; Whilst an effective government would have provided extensive welfare programs and adjust national tax systems to aid those groups, the British government failed to provide any protection and only succeeded in antagonizing the beneficiaries of the reform.
Coupled with mismanagement of government injections and low tax revenue, the situation snowballed and endangered local autonomy which thus further fueled civic unrest.This stresses the importance of establishing tax systems which enjoy the wide support of the public and are simple to administer;[10] The Community Charge was later scrapped and replaced under John Major's cabinet.
However, this trend is still challenged by some economists who believe in its efficiency due to factors like the simplicity of administration or lower tax evasion rates.
[14] Such taxes are often imposed at a uniform rate so they will make up a greater proportion of the final price of cheaper brands, compared to the higher-quality products generally consumed by the wealthy.
Therefore, as a proportion of available expenditure, the relative tax burden falls more heavily on households with lower incomes.
Some governments offer rebates to households with lower incomes, ostensibly in an effort to mitigate the regressive nature of these taxes.
A related concept exists where production and importation of essential goods are strictly controlled, such as milk, eggs, cheese and poultry under Canada's supply management system,[when?]
Some examples include tariffs imposed on steel imported into United States from all countries except for Canada and Mexico in April 2018 by Donald Trump.
This implies that as the value of the asset purchased or owned by the taxpayer increases, the tax rate applied decreases.
[28][29][30][31] One of the key features of a progressive tax system is that it takes into account the taxpayer’s ability to pay.
This method assumes that a household’s economic wellbeing, or welfare, is closely linked to its after-tax income.
This method involves measuring the difference in the Gini coefficient of incomes before and after taxes and transfers.
This method takes into account the broader concept of redistribution, which includes not only taxes but also transfers and other forms of government intervention.
[46] Neoliberalism, characterized by its emphasis on free markets, limited government intervention, and individual responsibility, has had a profound impact on tax systems worldwide.
This approach often results in regressive tax structures, where the burden falls disproportionately on lower-income individuals and households.
Examining real-world examples of regressive taxation offers valuable insights into its impact on different societies and the efficacy of various policy responses.
