A sales tax is deemed __________ because everybody pays at the same rate, but the more you make, the lower the percentage of your income that goes to buying items and paying sales tax.

Question

Quizplus · Accepted Answer

A regressive tax is one in which the tax rate decreases as income increases. In the case of a sales tax, everyone pays the same percentage on their purchases, but because those with lower incomes spend a higher proportion of their income on taxable items, the burden of the tax falls more heavily on them. This makes it regressive in nature.

A Sales Tax Is Deemed __________ Because Everybody Pays at the Same