During recent elections, consumer groups in various states attempted to get the sales tax on all medicines and drugs removed. They argued that such a tax is severely regressive. What is the economic interpretation of their statement?
a. The poor get ill more often than do the rich.
b. The poor pay higher prices for medicine and drugs than do the rich.
c. The poor pay a higher percentage of their income for medicine and drugs than do the rich.
d. All consumers pay too much money for medicine and drugs.
e. The sales tax discourages the poor from seeking medical treatment.
Question 2
Mr. Thomson has a before-tax income of 20,000 and paid taxes of 2,000 . Ms. Lynch had a before-tax income of 10,000 and paid taxes of 1,500 . Based on this information, which of the following is correct?
a. The tax system is progressive.
b. The tax system is proportional.
c. The tax system is regressive.
d. The tax system is based on the benefits received.
e. There is insufficient information to answer the question.
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