Under a proportional sales tax system, who would pay more in sales taxes when making purchases?

• A. Individuals who spend more money on taxable goods and services
• B. All individuals pay the same amount in sales taxes
• C. Individuals with lower incomes regardless of their spending
• D. Individuals who only purchase non-taxable items

Answer: (A)

Verified step by step guidance

1. Understand what a proportional sales tax system means: it is a tax system where the tax rate is constant, so the tax paid is directly proportional to the amount spent on taxable goods and services.
2. Identify that the sales tax paid by an individual is calculated as the tax rate multiplied by the total expenditure on taxable goods and services, which can be expressed as \(\text{Sales Tax} = \text{Tax Rate} \times \text{Expenditure on Taxable Goods}\).
3. Recognize that since the tax rate is the same for everyone, the key factor determining how much tax an individual pays is how much money they spend on taxable goods and services.
4. Analyze the options: individuals who spend more on taxable goods will pay more sales tax because the tax is proportional to spending; those who buy only non-taxable items pay no sales tax; income level alone does not determine sales tax paid unless it affects spending on taxable goods.
5. Conclude that under a proportional sales tax system, the individuals who pay more in sales taxes are those who spend more money on taxable goods and services.