Short Answer 
Sales tax is an indirect tax collected by retailers on sales of goods and services, impacting consumers as part of the price. It is considered regressive, disproportionately affecting low-income individuals who spend a larger portion of their income on taxable items compared to wealthier individuals, who experience a lesser burden due to their spending patterns.
Step 1: Understand What Sales Tax Is
The sales tax is an indirect tax applied to the sale of goods and certain services. This tax is collected by retailers at the moment of sale and is typically included in the final price the consumer pays. Unlike direct taxes, where individuals pay the government directly, sales tax is collected by the seller and passed on to the government.
Step 2: Recognize the Regressive Nature of Sales Tax
Sales tax is considered regressive, meaning it disproportionately impacts low-income individuals. Lower-income groups tend to spend a larger portion of their earnings on goods and services that are taxable, resulting in a higher effective tax rate compared to wealthier individuals. In contrast, high-income groups usually spend a smaller fraction of their income on taxable purchases.
Step 3: Understand the Impact on Different Income Groups
The impact of sales tax varies significantly among different income levels. For low-income earners, the tax constitutes a substantial burden because they use a higher percentage of their income for essential goods that incur sales tax. Wealthier individuals, while still affected by sales tax, experience a smaller impact due to their overall spending patterns, making it essential to recognize how sales tax burdens different groups unequally.