Homework Answers
Ans:
Sales tax = consumption * sales tax rate
Percentage of income paid in taxes = (Sales tax / Income) * 100
1)
| Income | Consumption | Sale tax | Percentage of income paid in taxes |
| $10,000 | $11,000 | $660 | 6.6% |
| $20,000 | $20,000 | $1200 | 6% |
| $40,000 | $36,000 | $2160 | 5.4% |
| $80,000 | $60,000 | $3600 | 4.5% |
2) regressive tax
A regressive tax is a tax where tax rate decreases as the taxable income increases. Example of regressive tax is sales tax.
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