Below is a table showing the income of individuals A and B together with their food and clothing purchases in an untaxed environment (NOTE: K = 1000).
Individual Income Food Clothing
A $20,000 $5,000 $2,000
B $50,000 $8,000 $8,000
Before even considering any particular numbers, define precisely what is meant when we say that a tax system is regressive. Do the same for what is meant by progressive.
Suppose a general sales tax of 5% is applied to all purchases, and purchasing behavior does not change as a result. In consideration of the sum total of ALL sales taxes paid, illustrate why this tax system is regressive.
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A $20,000 $5,000 $2,000
B $50,000 $8,000 $8,000
Before even considering any particular numbers, define precisely what is meant when we say that a tax system is regressive. Do the same for what is meant by progressive.
Suppose a general sales tax of 5% is applied to all purchases, and purchasing behavior does not change as a result. In consideration of the sum total of ALL sales taxes paid, illustrate why this tax system is regressive.
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