Question

Which of the following items would raise the most revenue for the government from a 10 percent sales tax?

A) food
B) food sold in restaurants
C) meat sold in restaurants
D) beef sold in restaurants
E) all equally

Answer 1

Food sold in restaurants would raise the most revenue from a 10 percent sales tax because it has a broader base compared to just meat or beef sold in restaurants and generally translates to higher menu prices.

Step-by-step explanation:

The item that would raise the most revenue for the government from a 10 percent sales tax would be B) food sold in restaurants. This is because it encompasses a larger category and broader base of taxable items compared to just meat or beef sold in restaurants. A broader tax base tends to generate more revenue as it captures a more significant portion of consumer spending. Food in general might be consumed in various settings beyond restaurants, but food sold in restaurants specifically involves additional value in terms of service and experience, which often translates to higher menu prices and, consequently, larger tax revenues when a sales tax is applied.

At state and local levels, sales taxes are significant revenue sources, and while some essential items like food and medicine might be exempt, food sold in restaurants often incurs a sales tax. This consumption is widespread and consistent, which means it can generate significant tax revenue over time.