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    Question

    A regressive tax structure implies that the average tax

    rate:
    A Increases with income. Correct Answer Incorrect Answer
    B Decreases with income. Correct Answer Incorrect Answer
    C Is constant regardless of income. Correct Answer Incorrect Answer
    D Is zero for low incomes. Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    In a regressive tax, the tax as a percentage of income falls as income rises (e.g., a flat sales tax).

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