Answer:
The argument that items such as food and clothing should be exempt from sales tax because low-income people spend a greater percentage of their income on these goods than high-income individuals is motivated by concerns over regressive taxation.
Regressive taxation is a tax system where the tax rate decreases as income increases. In other words, lower-income individuals pay a higher percentage of their income in taxes compared to higher-income individuals when the tax rate is the same for all. When basic necessities like food and clothing are subject to sales tax at a flat rate, it can have a disproportionately larger impact on people with lower incomes because they must allocate a larger portion of their earnings to meet their basic needs. This is why there is a call to exempt such essential items from sales tax to make the tax system more equitable.
By exempting essential items from sales tax, policymakers aim to reduce the burden of taxation on low-income individuals and ensure that they have a better ability to meet their basic needs without being unduly affected by the tax. This approach is seen as a way to address income inequality and help protect the most vulnerable members of society from the regressive effects of taxation.