Option: D
Step-by-step explanation:
An example of a regressive tax among the options provided is D) sales tax. A regressive tax is one in which the tax burden falls more heavily on low-income individuals or households compared to high-income individuals or households. In the case of sales tax, it is typically a fixed percentage of the purchase price of a good or service. This means that regardless of a person's income level, they pay the same percentage in taxes when they make a purchase.
The regressive nature of sales tax becomes apparent when we consider the impact on individuals with lower incomes. Since lower-income individuals tend to spend a larger proportion of their income on necessary goods and services, such as food and basic essentials, a sales tax places a greater relative burden on them compared to higher-income individuals. The tax takes a larger percentage of their income, leaving them with less discretionary spending power.
On the other hand, higher-income individuals may spend a smaller proportion of their income on taxable goods and services, and they may have more disposable income to allocate towards savings or non-taxable investments. As a result, sales tax affects them less proportionally, and they are likely to experience a lower tax burden compared to individuals with lower incomes.
It is important to note that the other options listed in the multiple-choice question also have different tax implications, but they may not necessarily fall under the definition of regressive taxes. For example, social security tax is typically considered regressive at lower income levels, but it becomes progressively fairer as income increases due to the cap on taxable earnings. State and local taxes levied on property and federal income tax are generally considered progressive, as they tend to impose higher tax rates on higher-income individuals.