Which of the following is true?
A) A regressive tax rate structure imposes an increasing marginal tax rate as the tax base increases
B) Regressive tax structures are the most common tax rate structure
C) An example of a regressive tax is an excise tax
D) In terms of effective tax rates, a sales tax can be viewed as a regressive tax
E) None of these

Question

Quizplus · Accepted Answer

In terms of effective tax rates (the percentage of income or wealth paid in taxes), a sales tax can be viewed as regressive because it takes a larger portion of income from low-income individuals than from high-income individuals. Option A is describing a progressive tax structure. Option B is false, as progressive tax structures are the most common. Option C is describing an example of a regressive tax (excise tax), not defining what a regressive tax is.

Which of the Following Is True