![]() In flat taxation systems, the tax rate is the same for all, no matter the income. ![]() Hence, regressive income tax works by principles that facilitate income inequality, even though it does aid in reducing the shadow economy. This means that the tax burden, again, is greater for those with low income. ![]() By buying the same product, people with different incomes pay the same price which, however, counts for a higher percentage for low-income earners than for high-income earners. An example of this type of taxation is the value-added tax (VAT).
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