Let's go through the question step-by-step and fill in the blanks using the calculated values.
Step 1: Determine the cost of the computer.
Given that each person paid $160 in sales tax at an 8% combined state and local sales tax rate:
[tex]\[
\text{Cost of computer} = \frac{\text{Sales tax paid}}{\text{Sales tax rate}}
\][/tex]
[tex]\[
\text{Cost of computer} = \frac{160}{0.08} = 2000 \text{ dollars}
\][/tex]
Step 2: Calculate the tax rates for Tony, Juan, and Isabel.
Tony:
[tex]\[
\text{Income} = 10,000 \text{ dollars}
\][/tex]
[tex]\[
\text{Tax rate} = \frac{\text{Sales tax paid}}{\text{Income}} \times 100
\][/tex]
[tex]\[
\text{Tax rate} = \frac{160}{10,000} \times 100 = 1.6\%
\][/tex]
Juan:
[tex]\[
\text{Income} = 50,000 \text{ dollars}
\][/tex]
[tex]\[
\text{Tax rate} = \frac{160}{50,000} \times 100 = 0.32\%
\][/tex]
Isabel:
[tex]\[
\text{Income} = 75,000 \text{ dollars}
\][/tex]
[tex]\[
\text{Tax rate} = \frac{160}{75,000} \times 100 = 0.213333\%
\][/tex]
Step 3: Determine the type of tax system.
In this scenario, individuals with higher incomes pay lower effective tax rates. This defines a regressive tax system.
Step 4: Determine who pays the highest tax rate.
Tony pays the highest tax rate at 1.6%.
Step 5: Determine who is most affected by an increase in the sales tax rate.
Tony would be the most affected by an increase in the sales tax rate because he has the lowest income.
Finally, fill in the blanks in the given statements:
```
This scenario describes a regressive tax system.
Isabel pays 0.21\%, Tony pays 1.6\%, and Juan pays 0.32\% on the computer.
Tony pays the highest tax rate on the computer.
Tony would be the most affected by an increase in the sales tax rate.
```
