Final answer:
Sales tax is an indirect and regressive tax. Lower-income earners generally experience a larger financial burden from the sales tax, making it regressive. In contrast, a gift tax that increases its rate beyond a certain threshold, as in the example provided, would be considered progressive.
Step-by-step explanation:
Sales tax is best described as an indirect and regressive tax. An indirect tax is one that is collected by an intermediary from the person who bears the final economic burden of the tax. For example, retailers collect sales tax from customers and then remit it to the government.
A regressive tax is one which takes a larger percentage of income from lower-income earners than from higher-income earners. Sales tax tends to be regressive because lower-income individuals generally spend a larger share of their income on consumption of goods and services subject to sales tax compared to higher-income individuals.
Considering the example provided, a gift tax with a rate of 10% for amounts up to $100,000 and 20% for anything over that amount would represent a progressive tax.
This is because as the value of the gift increases beyond $100,000, the tax rate increases, which means individuals with the ability to give larger gifts will pay a higher percentage of that gift in taxes, thereby bearing a larger burden of the tax as their income or ability to give increases.
Therefore, the correct answer is c. Regressive.