A "regressive" tax is one that disproportionately burdens poorer groups. The amount of money payable under a regressive tax gets lower as payment taxed increases, or the activity taxed becomes more productive.  Energy consumption generally makes up a larger portion of the personal budgets of poorer groups. This is because their budgets are significantly smaller and they tend to purchase a greater deal of perishable goods. Specifically, durable goods such as new sets of cutlery etc. tend not to increase the level of carbon consumption in a household. However, perishable goods such as food often need to be cooked.  Companies that are subjected to a flat carbon tax that cannot be offset by carbon credit training are likely to pass on some of their tax liability to consumers in the form of increased prices. As has already been established, the cost of consumables and energy purchases constitute a greater proportion of the income of poorer households. A flat carbon tax, even if levied against businesses and industrial polluters would, inevitably, be paid in part by the poor.  Tradable carbon credits, on the other hand, could conceivably result in a net transfer of wealth to the poor. Although the poor spend a bigger proportion of their income on energy, the wealthy consume a far greater amount of carbon in absolute terms. So under a cap-and-trade regime, we would expect the poor (and the energy thrifty) to have excess credits to sell to their more profligate neighbours. [1]  [1] Stein, Adam. “Carbon tax vs. carbon market: who would win in a fight?” Terrapass.com 15/08/2006