Question

Nikki is buying a new house and new furniture to decorate her new home. What kind of tax- progressive or regressive - will Nikki pay on each of her new purchases? Your response should also explain the difference between a progressive and a regressive tax.

Answer 1

Nikki is buying a new house and car which is the property he will hold. And property taxes are prone to regressive taxes.

What is the difference between a progressive and a regressive tax?

Property taxes are essentially regressive because, regardless of income, two individuals in the same tax jurisdiction pay the same amount of property tax if they live in homes with the same values.

In general, lower-income earners are assumed to dwell in less expensive homes, partially indexing property taxes to income.

A progressive tax is one that takes a larger share of the revenue from high-income persons than from low-income people.

A regressive tax is one that takes a bigger percentage of low-income people's income than high-income people's income.

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