In the scenario where four households have different incomes, which one pays the highest percentage in taxes if the taxes are regressive?

In a regressive tax system, the tax rate decreases as income increases, meaning that those with lower incomes pay a higher percentage of their income in taxes compared to those with higher incomes. This structure disproportionately affects lower-income households.

In the scenario provided, if the first household has the lowest income among the four, it will pay a higher percentage of its income in taxes relative to the higher-income households. As a result, the first household, despite potentially paying a smaller total amount in dollars compared to wealthier households, bears the greatest tax burden as a share of its income. This reflects the key characteristic of regressive taxation, where those with lesser financial resources end up contributing a larger portion of their earnings to tax payments, thus leading to the conclusion that the first household pays the highest percentage in taxes.

Therefore, choosing the first household as the answer accurately reflects the implications of a regressive tax system on tax burdens compared to higher-income households that would pay a smaller percentage of their income in taxes.