Progressive vs Regressive Taxes
The cluster debates the regressive effects of consumption, sales, and flat taxes on lower-income groups versus the fairness of progressive income taxation based on ability to pay and marginal utility.
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Even a flat tax on consumption (like the sales tax) is regressive in effect, because the poor spend a greater fraction of their income on consumption. Now, if you suggested a high tax on luxury goods and services, and no tax on necessities like unprepared food, basic clothes, etc. I might be able to get behind that.
It seems like you don't know what progressive taxation is since it's what you're actually arguing for...
Taxation based on consumption is a horrible idea, because it impacts the people with low incomes much more than the people with high incomes. Everyone must spend a fraction of their income on consumption merely to exist. The poorer you are, the larger that fraction. Which means that a tax based on consumption is in effect a form of progressive taxation turned upside down where you pay less the more you earn.
Why would the tax be regressive?
A sales tax is always regressive, no matter how you tier it. Poor people spend 100% of their income/net worth monthly. The ultra wealth spend something like 0.00000000000001%.
Are you asking for an explanation of why a consumption tax disproportionately affects citizens with lower incomes?
Why not "tax people with a lot of money, to help pay those who do not"?
If the wealthiest are de facto not paying as much tax, proportionally, as the middle or poorest classes, then federal income tax is not truly progressive. It has been increasingly regressive since the peak marginal rates back in the 1950s. This includes the use of numerous loop holes in the tax code to avoid what should otherwise be a large tax, and those primarily benefit the wealthy. The overall tax burden is what counts. For instance, some states do not have income tax for anyone, but they ge
Those who earn less pay less in income tax and we still had to implement a progressive taxation policy because of how much a flat tax percentage hurts those without disposable income compared to the wealthy.The poor already spend all their money on necessities. If you go to a flat sales tax it will hurt them more than the current progressive regime and favor the wealthy.
Income taxes are progressive while tariffs are regressive, so those under $150k are likely to be worse off.