An excise tax on gasoline is regressive if
A)rich people buy more gasoline than poor people.
B)the demand for gasoline is elastic.
C)the tax causes people to buy less gasoline.
D)poor people spend a larger portion of their incomes on gasoline than rich people.

Question

Quizplus · Accepted Answer

A regressive tax is one that takes a larger portion of income from low-income earners than from high-income earners. If poor people spend a larger portion of their incomes on gasoline than rich people, then an excise tax on gasoline would be regressive. Choice A is not a determinant of the regressiveness of the tax, and choices B and C are not directly related to the concept of regressiveness.

An Excise Tax on Gasoline Is Regressive If