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Tee difference between a progressive and a regressive tax is that a progressive tax is a direct form of taxation where the rate of taxing increases as income increases, whereas a regressive tax is an indirect tax where the rate of taxing decrecreases as income increases.
A regressive tax is a tax that increases as a percentage of income as the amount of income declines. How it works (Example): The United States has the opposite of a regressive tax system. That is, it has a system, which means that different portions of a personâs or companyâs income are taxed at increasing rates (thatâs why the rates are often referred to as marginal rates).