Scenario: There are 4 households in a locality. The annual income of the first household is $20,000, the annual income of the second household is $47,000, the annual income of the third household is $50,000, and the annual income of the fourth household is $71,000.
-Refer to the scenario above.If the first household pays 20 percent of its income in tax,the second household pays 17.5 percent of its income in tax,the third household pays 13 percent of its income in tax,and the fourth household pays 10 percent of its income in tax,income taxes are ________ in nature.

Question

Quizplus · Accepted Answer

Regressive taxes take a smaller percentage of income as the income rises. In this scenario, households with higher incomes pay a smaller percentage of their income in tax, indicating the tax is regressive.

Scenario: There Are 4 Households in a Locality