A regressive tax is BEST defined as a rate of tax A) that falls as income rises. B) that rises as income rises. C) that is constant as income rises. D) that is applied to corporate incomes.

The correct answer is letter "A".

A regressive tax is BEST defined as a rate of tax that falls as income rises.

Explanation:

Within economic theory there are two concepts to classify taxes, according to their relationship with the taxpayer's income: progressive and regressive taxes.

Regressive taxes are collected in a smaller percentage as income increases. They represent a greater burden for individuals of low socioeconomic status. In other words, regressive taxes are those that affect the poor relatively more than the rich. Therefore, they do not have a redistribution effect of wealth. On the contrary, if they are very high they can accentuate inequality in a society.

To understand the operation of this type of tax, it is important to keep in mind that citizens who earn less are required to spend a greater part of their salary, mainly on essential goods such as food. That is, their savings are less or non-existent.

A.

A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases