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Your assessment is flawed. Because income taxes are generally progressive, you will have a lower rate applied to a portion of your income and higher rates towar

by dmode 9y ago

Your assessment is flawed. Because income taxes are generally progressive, you will have a lower rate applied to a portion of your income and higher rates towards the top end. Effectively paying a lower absolute rate. But you would pay the full sales tax on all your purchase, leading to a similar net effect.

BeetleB 9y ago
>Your assessment is flawed. Because income taxes are generally progressive, you will have a lower rate applied to a portion of your income and higher rates towards the top end. My assessment takes all of that into account. I live in one of the higher income tax states, and one of the lower sales tax rates. I have real numbers I can work with. I pay over $6K/year in state income tax, and my income is nowhere near $150K. Do the math: At a 10% sales tax, how much do I need to spend to match that? If I take all of my annual spending per year, a 10% sales tax would be less than $6K. And keep in mind we don't pay sales tax for housing and services. At 10%, my sales tax would likely be under $3K. Perhaps even under $2K. >But you would pay the full sales tax on all your purchase, leading to a similar net effect. Not true in many states. In one state I lived in the sales tax on groceries was 1%, and over 6% on everything else, for example. I believe I encountered a state with 0% sales tax on groceries, but high on everything else.
quadrangle 9y ago
> Because income taxes are generally progressive Except that assumption is wrong. State taxes are typically not progressive, even though they should be. The lack of progressive brackets at the state level is one of the sources of biggest economic injustice in our tax system in this country.
- tomjakubowski 9y ago
  https://taxfoundation.org/state-individual-income-tax-rates-brackets-2017/ https://taxfoundation.org/state-individual-income-tax-rates-... Forty-three states levy individual income taxes. Forty-one tax wage and salary income, while two states—New Hampshire and Tennessee—exclusively tax dividend and interest income. Seven states levy no income tax at all. Of those states taxing wages, eight have single-rate tax structures, with one rate applying to all taxable income. Conversely, 33 states levy graduated-rate income taxes, with the number of brackets varying widely by state. California and Missouri each have ten brackets, the most in the country. Some states have absurdly narrow banding in their brackets, "Missouri taxpayers reach the state’s tenth and highest bracket at $9,072 in annual income". Alabama's highest bracket starts at $3,000 for single filers.
  - quadrangle 9y ago
    Thanks for adding those details. Some brackets are absurd not only in the top being very low income level but the difference in rates being negligible. Oregon has 4 brackets but they are 5%, 7%, 9%, and 9.9%. But the 9% kicks in at $8400, so even those at poverty-level incomes are paying that high. The fact that the next bracket starts at $125,000 would be notable if the jump weren't so pathetic. But the extra less than 1%? Come on… absurd. This does NOT count as progressive taxation by any real measure.

by dmode 9y ago

BeetleB 9y ago

>Your assessment is flawed. Because income taxes are generally progressive, you will have a lower rate applied to a portion of your income and higher rates towards the top end. My assessment takes all of that into account. I live in one of the higher income tax states, and one of the lower sales tax rates. I have real numbers I can work with. I pay over $6K/year in state income tax, and my income is nowhere near $150K. Do the math: At a 10% sales tax, how much do I need to spend to match that? If I take all of my annual spending per year, a 10% sales tax would be less than $6K. And keep in mind we don't pay sales tax for housing and services. At 10%, my sales tax would likely be under $3K. Perhaps even under $2K. >But you would pay the full sales tax on all your purchase, leading to a similar net effect. Not true in many states. In one state I lived in the sales tax on groceries was 1%, and over 6% on everything else, for example. I believe I encountered a state with 0% sales tax on groceries, but high on everything else.

quadrangle 9y ago

> Because income taxes are generally progressive Except that assumption is wrong. State taxes are typically not progressive, even though they should be. The lack of progressive brackets at the state level is one of the sources of biggest economic injustice in our tax system in this country.

tomjakubowski 9y ago
https://taxfoundation.org/state-individual-income-tax-rates-brackets-2017/ https://taxfoundation.org/state-individual-income-tax-rates-... Forty-three states levy individual income taxes. Forty-one tax wage and salary income, while two states—New Hampshire and Tennessee—exclusively tax dividend and interest income. Seven states levy no income tax at all. Of those states taxing wages, eight have single-rate tax structures, with one rate applying to all taxable income. Conversely, 33 states levy graduated-rate income taxes, with the number of brackets varying widely by state. California and Missouri each have ten brackets, the most in the country. Some states have absurdly narrow banding in their brackets, "Missouri taxpayers reach the state’s tenth and highest bracket at $9,072 in annual income". Alabama's highest bracket starts at $3,000 for single filers.
- quadrangle 9y ago
  Thanks for adding those details. Some brackets are absurd not only in the top being very low income level but the difference in rates being negligible. Oregon has 4 brackets but they are 5%, 7%, 9%, and 9.9%. But the 9% kicks in at $8400, so even those at poverty-level incomes are paying that high. The fact that the next bracket starts at $125,000 would be notable if the jump weren't so pathetic. But the extra less than 1%? Come on… absurd. This does NOT count as progressive taxation by any real measure.