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National Sales Tax?
Mar. 31st, 2005 01:16 pmGeorge Will (a prominent Republican op-ed shill) is pushing a National Sales Tax, to replace the national income tax. This is a really bad and stupid idea. I'd go into why, but Kevin Drum has a good quick rundown. I'm gonna focus on just one part.
A sales tax is regressive. That's the opposite of progressive, like the current income tax is. It means the tax burden falls harder and heavier on the poor, and less on the rich. I'll explain why. Okay, let's say it does actually work at 23%, which is what the bill in the article proposes. That means everything will suddenly cost 23% more, on top of whatever state and local sales taxes there are. A dollar thing is now $1.25. That adds up QUICK. If you're making, say, $10,000 a year, it's suddenly as if you're only making about $7500 a year, because in general, you're going to spend most of your money just to keep alive and keep working. Your income just dropped 25%. Whereas somebody rich, who doesn't spend all of their money, and already pays higher income taxes, will end up paying less in taxes, usually.
Any tax set up like that taxes a bigger bite out of people with less absolute income, because they're spending more of their money just to keep afloat. The only people who benefit are people who can save a significant portion of their money. And besides that, even if it worked perfectly evenly for everybody, it's still regressive, because it leaves somebody who makes $10,000 a year with $7700, and somebody who makes $100,000 a year with $77,000. The poor have less money to spare, the rich have more money to spare. You can survive on $77,000 a year, or $770,000 a year much easier than on $7700 a year.
And that's the biggest single reason why this kind of tax is a bad idea, and why it's NOT "fair", no matter how much its supporters try to claim it is.
Tags: Politics, Links, News
A sales tax is regressive. That's the opposite of progressive, like the current income tax is. It means the tax burden falls harder and heavier on the poor, and less on the rich. I'll explain why. Okay, let's say it does actually work at 23%, which is what the bill in the article proposes. That means everything will suddenly cost 23% more, on top of whatever state and local sales taxes there are. A dollar thing is now $1.25. That adds up QUICK. If you're making, say, $10,000 a year, it's suddenly as if you're only making about $7500 a year, because in general, you're going to spend most of your money just to keep alive and keep working. Your income just dropped 25%. Whereas somebody rich, who doesn't spend all of their money, and already pays higher income taxes, will end up paying less in taxes, usually.
Any tax set up like that taxes a bigger bite out of people with less absolute income, because they're spending more of their money just to keep afloat. The only people who benefit are people who can save a significant portion of their money. And besides that, even if it worked perfectly evenly for everybody, it's still regressive, because it leaves somebody who makes $10,000 a year with $7700, and somebody who makes $100,000 a year with $77,000. The poor have less money to spare, the rich have more money to spare. You can survive on $77,000 a year, or $770,000 a year much easier than on $7700 a year.
And that's the biggest single reason why this kind of tax is a bad idea, and why it's NOT "fair", no matter how much its supporters try to claim it is.
Tags: Politics, Links, News
