Greg pays sales tax of $7.20 on the purchase of a lamp for $120. Michelle paid sales tax of $9 on the purchase of a similar lamp for $150. Greg's taxable income for the current year is $40,000. Michelle's taxable income is $55,000.
I.The structure of the sales tax is progressive if based on taxable income.
II.The structure of the sales tax is proportional if based on sales price.

Question

Greg pays sales tax of $7.20 on the purchase of a lamp for $120. Michelle paid sales tax of $9 on the purchase of a similar lamp for $150. Greg's taxable income for the current year is $40,000. Michelle's taxable income is $55,000.
I.The structure of the sales tax is progressive if based on taxable income.
II.The structure of the sales tax is proportional if based on sales price.
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Quizplus · Accepted Answer

Statement I is incorrect because there is no indication that the sales tax is based on the buyer's taxable income. Statement II is correct because the sales tax is a flat rate applied to the purchase price, irrespective of the buyer's income.

Greg Pays Sales Tax of $7