Certified Government Financial Manager (CGFM) 2026 – 400 Free Practice Questions to Pass the Exam

Sales tax is commonly regarded as a regressive tax because it affects individuals and households uniformly, regardless of their income levels. In a regressive tax system, lower-income individuals pay a higher percentage of their income compared to those with higher incomes. For example, when a person with a lower income purchases goods or services and pays a sales tax, that tax represents a larger portion of their overall financial resources than it does for a wealthier person making the same purchase.

In contrast, income tax is generally progressive, meaning that higher-income earners pay a higher percentage of their income in taxes. Property taxes can also have progressive elements depending on how property values and tax rates are structured, particularly if they are based on the value of the property owned. Capital gains tax is typically assessed on profits made from the sale of assets, and while it may be criticized for various reasons, it does not fit the definition of regressive taxation. Therefore, sales tax stands out as the most recognized regressive tax due to its uniform application on purchases, impacting lower-income individuals more significantly relative to their earnings.