Which type of tax tends to burden lower-income individuals disproportionately?

Regressive taxes are designed in such a way that they take a larger percentage of income from lower-income individuals than from those with higher incomes. This occurs because regressive taxes, such as sales taxes or certain fees, do not consider a taxpayer's ability to pay. For example, if a sales tax is applied uniformly at a fixed rate, everyone pays the same percentage on purchases, which can result in a heavier burden on those with lower incomes. This is because lower-income individuals spend a larger portion of their earnings on consumable goods and services compared to wealthier individuals, who can afford to save or invest a greater share of their income.

In contrast, progressive taxes are designed to tax higher income levels at increased rates and are intended to reduce income inequality. Flat taxes impose the same tax rate on all taxpayers, regardless of income level, which does not inherently place a heavier burden on lower-income individuals. Capital gains taxes specifically target income generated from investments, which primarily impacts wealthier individuals who are more likely to have substantial investments, rather than affecting lower-income earners disproportionately. Thus, regressive taxes correctly highlight the burden placed upon lower-income individuals, making this the appropriate choice.