A payroll tax with a 4.5 percent tax rate and exemption for income above $42,000 is
A)a progressive tax.
B)an indirect tax.
C)a regressive tax.
D)a proportional tax.

Question

Quizplus · Accepted Answer

A regressive tax takes a larger percentage of income from those with lower incomes, and a smaller percentage from those with higher incomes. In this case, the exemption for income above $42,000 means that those with higher incomes will have a smaller percentage of their income subject to the tax, while those with lower incomes will be taxed on a larger percentage of their income. Thus, this is a regressive tax.

A Payroll Tax with a 4