Which tax system places a heavier burden on lower-income earners?

A regressive tax system imposes a heavier burden on lower-income earners because it takes a larger percentage of income from those who earn less compared to those who earn more. In a regressive system, as income increases, the fraction of income paid in taxes decreases. This means that those with lower incomes pay a higher proportion of their earnings in taxes compared to higher-income individuals.

For instance, if there is a sales tax or a fixed fee that everyone pays, individuals with lower incomes spend a larger share of their earnings on that tax than wealthier individuals do. This structure can exacerbate income inequality as it effectively reduces disposable income for those at the bottom of the income ladder.

In contrast, a flat tax applies the same tax rate to everyone regardless of income level, thus not disproportionately affecting lower-income earners compared to higher earners. A progressive tax system increases the tax rate as income rises, placing a heavier burden on those who can afford to pay more. A value-added tax is a consumption tax applied at each stage of production, but its impact can vary based on consumption patterns, making it less straightforward in its effect on income distribution.