Why is sales tax likely to make tax more or less regressive

Reference no: EM131922971

Problem

People with low income spend more, as a share of their overall income, on food and clothing than wealthier people. As a result, they tend to spend a higher proportion of their income relative to people with high income. Given this trend, explain how a general sales tax of 8 percent could be regressive. Now, suppose that food and children's clothing are exempted from the sales tax. Is this likely to make the tax more or less regressive?

Reference no: EM131922971

Questions Cloud

Statement found on the assembly instructions : Consider the statement found on the assembly instructions for a piece of patio furniture: "The iron metal surface can be cleaned by soaking it in muriatic acid.

Why proposes tax may not benefit consumers after all : Drawing on the idea of economic incidence and administrative cost, explain why this tax may not benefit consumers after all.

What steps might you take in this market : This action has hurt several counties, including themselves. The U.S., the new "Super Power of Energy" due to fracking, has been also affected.

Compounds using only a grignard reaction : Provide methods for synthesizing the following compounds using only a Grignard reaction, plus any necessary workup.

Why is sales tax likely to make tax more or less regressive : Now, suppose that food and children's clothing are exempted from the sales tax. Is this likely to make the tax more or less regressive?

How would you exploit this risk : Your project has a risk that has been identified as an opportunity. Your company stands to make a large profit if this opportunity is realized.

Write the correct formulas for the products for reaction : 1) Write the correct formulas for the products for reaction: Propene gas (C3H6) reacts with oxygen gas to form two gaseous products: carbon dioxide and water.

Draw the profit profile with the break even point : Does anyone can help me for this homework? I want to compare with the answers that I have here. Can anyone draw the profit profile with the break even point.

Develop a project network-predecessor activities : A project team has started gathering information necessary to develop a project network-predecessor activities.

User Account

All Pages