The answer is C. People with lower incomes tend to purchase more services, which are rarely subject to sales tax.
Step-by-step explanation:
Lower-income households spend a greater share of their income than higher-income households do. The burden of a retail sales tax is regressive when measured as a share of current income: the tax burden as a share of income is highest for low-income households and falls sharply as household income rises. The burden of a sales tax is more proportional to income when measured as a share of income over a lifetime. Even by a lifetime income measure, however, the burden of a sales tax as a share of income is lower for high-income households than for other households: a sales tax (like any consumption tax) does not tax the returns (such as dividends and capital gains) from new capital investment and income from capital makes up a larger portion of the total income of high-income households.
