Discuss whether the Texas sales tax is regressive in nature

Question

What will be an ideal response?

Answer 1

Answer:
A. Regressive tax
1. system of taxation whereby the tax rate increases as income decreases
2. places a higher burden on the poor than the wealthy
B. Texas sales tax
1. largest single component of tax revenue
2. sales tax revenue increased 39 percent from 2010 to 2014
3. one of the highest sales tax rates in the nation
4. 6.25 percent tax is on the retail price of selected goods and services sold in the state
5. cities can assess their own 1 percent tax, which is added to the state levy
6. Special districts, such as those for parks, crime control, or sport facility construction, often add another penny to the actual tax rate
7. combined local and state tax rate can range as high as 8.25 percent
C. Regressive nature of Texas sales tax
1. sales tax does not apply to all purchases
2. high sales tax on purchases burdens a low income family and makes their tax payout a greater percentage of their income
3. discourages spending, which has a negative impact on both jobs and the economy
D. Factors that lesson the regressive nature of Texas sales tax
1. many of the expenses of a financially disadvantaged family are sales tax-exempt
2. food and prescription and nonprescription drugs, medical services, housing, and utilities are all free from the state portion of the sales tax
3. sales tax only applied to prepared food
a. family earning more money would be likely to eat out more often paying more food taxes
4. motor vehicle sales tax to be a part of the broader tax
5. different services are taxable