Question

The Westins and the Shermans live in the same city and pay the same sales tax rate, and both families made $14,000 in taxable purchases last year. If the Westins made $86,000 and the Shermans made $33,000 last year, is the sales tax in their city an example of a regressive tax?
Yes, because the Westins and the Shermans both paid the same sales tax rate.
B. No, because the Shermans paid a higher percentage of their income in sales tax than the Westins did.
C. No, because the Westins and the Shermans both paid the same sales tax rate.
D. Yes, because the Shermans paid a higher percentage of their income in sales tax than the Westins did.


Thanks!!!

Answer 1

Answer:

The correct answer is D.

Step-by-step explanation:

D. Yes, because the Shermans paid a higher percentage of their income in sales tax than the Westins did.

The Westins made $86,000 (high income)

The Shermans made $33,000 (low income)

But both paid the same sales tax rate of $14,000.

Regressive tax is applied uniformly and this causes lower-income people to pay a larger share of their income than rich people. It is not a fair way though it seems to be. Most regressive taxes are not income taxes.