During recent elections, consumer groups in various states attempted to get the sales tax on all medication and drugs removed. They argued that such a tax is severely regressive. Which of the following is the economic interpretation of their statement?

Question

Quizplus · Accepted Answer

The economic interpretation of the statement is that the poor pay a higher percentage of their income in taxes on medication than the rich. This is because sales tax is a regressive tax, meaning that it takes a higher percentage of income from low-income households than high-income households. Since the poor have a smaller income, the sales tax on medication and drugs takes up a relatively larger portion of their income compared to the rich, making it an unfair tax burden on them.

During Recent Elections, Consumer Groups in Various States Attempted to Get