1: Mary and Sara want to go shopping to buy new outfits for the weekend. They both fall in love with the same shirt and each decide to buy one for $15. At the register, a sales tax of 6% is added to the total. Since Mary makes more money than Sara, this purchase will not impact her overall budget as much as it will for Sara who makes less money. This is an example of a...?
A:Progressive tax
B:Regressive tax
C:Income tax
D:Excise tax***
Is this correct?
No.
Check the meaning of each of those terms.
Okay thank you, I will do that now!
Regressive tax***
Yes, Regressive tax
Thank you, very much!
You're welcome.
No, the correct answer is not D: Excise tax. An excise tax is a type of tax levied on specific goods or services, such as alcohol or tobacco. It is not relevant to this scenario.
The correct answer for this scenario is B: Regressive tax. A regressive tax is a tax that takes a larger proportion of income from low-income individuals compared to high-income individuals. In this case, because Sara makes less money than Mary, the $15 purchase will have a greater impact on her overall budget. The fact that the sales tax is a fixed percentage (6%) means that it affects both Mary and Sara equally, regardless of their income levels. Therefore, it is considered a regressive tax in this context.