Question

You and your friend bought the exact same TV and paid 7% sales tax on the purchase. Your friend eams three times as much money as you. Which tax system is this? (5 points)

-Regressive

-Progressive

-indirect

-Direct

Answer 1

-Regressive

Step-by-step explanation:

A regressive tax system imposes a greater tax burden on low-income earners. Imposing a uniform tax rate on everyone regardless of their income is an example of a regressive tax system. High-income earners will be left with more money to spend if the tax rate is the same for everyone.

Since this friend earns three times more, the sales tax will not have a lot of effect on their income. The sales tax will have a significant impact on the low-income earner as it will take away a sizeable part of their disposable income.