More recently, arguments have gained ground in favor of tax reforms with regressive tendencies in the industrial democracies. An additional factor was an increase in technological and bureaucratic capabilities that enabled modern governments to keep track of economic activities and income sources. This was a consequence of political reforms that expanded voting rights, leading to the enactment of more progressive forms of taxation. In the advanced industrial democracies, however, regressive taxation eventually fell out of favor. In the modern period, regressive tax schemes remained common in economies with narrow elites, wide income disparity, underdeveloped industrial bases, and authoritarian political regimes. This tax was set at a fixed rate and administered by royal agents in the sale of this consumption necessity, even though the cost was a significantly greater burden for poor households. Likewise, the French gabelle, or salt tax, was an indirect tax with regressive distributional consequences. It was a levy applied at a fixed rate on each individual, regardless of income and property status. The head tax, such as the British poll tax and the Russian soul tax, was a direct tax with regressive distributional consequences. The preference was for taxes that were relatively simple to compute and collect. Likewise, a tax is considered regressive if the wealthy are able to avoid compliance more readily than the poor.īecause of the limited capabilities of premodern political authorities to assess value and monitor transactions, the earliest forms of taxation tended to be regressive. Regressive taxes usually have fixed rates, and are thus not sensitive to one ’s ability to pay. A regressive tax is one that has a disproportionately more negative economic effect on the poorer members of society than the wealthier members.
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