What type of tax has a higher impact on lower-income individuals than on higher-income individuals?

A regressive tax is one where the tax rate decreases as the income level increases, resulting in a higher burden on lower-income individuals compared to those who earn more. This type of tax structure often means that lower-income individuals pay a larger percentage of their income in taxes relative to their higher-income counterparts.

For example, sales taxes and some forms of consumption taxes can be considered regressive since everyone pays the same rate regardless of income. As a result, lower-income individuals have less disposable income left after paying these taxes, which can disproportionately affect their overall financial situation. In contrast, progressive taxes impose higher rates on those with higher incomes, making the burden lighter on lower-income earners, and proportional taxes apply the same percentage across different income levels, which doesn’t emphasize the disparity in impact between income groups. Similarly, general income taxes can be structured progressively, but not necessarily always. Thus, the key characteristic of a regressive tax is its disproportionate impact on lower-income individuals, making it the correct response in this context.