Question: Suppose that the following table describes the spending behavior of individuals at various income levels: Sales Tax Paid as Percentage Income Total Spending Sales Tax
Suppose that the following table describes the spending behavior of individuals at various income levels:
Sales Tax Paid as Percentage Income Total Spending Sales Tax of Income
$ 1,000
$ 1,000 2,000 1,800 3,000 2,400 5,000 3,500 10,000 6.000 100,000 40,000 Assuming that a sales tax of 10 percent is levied on all purchases, calculate
(a) The amount of taxes paid at each income level
(b) The fraction of income paid in taxes at each income level Is the sales tax progressive or regressive in relation to income?
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