2 ms·
Yes, "regressive" has a strict technical meaning of marginal rates going down. It has a very common practical meaning of affecting people with less income more
by geofft 8y ago
Yes, "regressive" has a strict technical meaning of marginal rates going down. It has a very common practical meaning of affecting people with less income more than people with more income. (For instance, it would be a coherent and meaningful sentence, despite being technically incorrect, to argue that subway fares are regressive.) Do you have a better word for that that is in common use?
The blog post you link (which I am attempting to read through, but the condescending first paragraph doesn't help) argues in favor of a progressive tax on the amount of consumption, which I will admit is a proposal I haven't seen before. If you can make this work logistically, it would address the problem of consumption taxes being "regressive." (So would other approaches like food stamps.) However, I don't see any discussion of how these taxes would influence the decision to consume vs. save. Is the person with $100K in income going to make the same decision in both scenarios? I would assume they'd be likely to consume more in scenario 1 and less in scenario 2, where they get taxed more as they consume more. (And they would consume even less under a progressive consumption tax.) In particular I worry about money being "lost"—instead of the $50K that has doubled to $100K being spent all in 20 years, perhaps only the $50K interest is spent or perhaps not even that because there's a disincentive to consume, and then the person lives off of investment income for the rest of their life. For the casual meaning of "regressive," I think it's politically/socially important to many people that someone who lives off passive income and chooses not to work not be in the same position as someone who works long hours and lives paycheck-to-paycheck, even if they consume the same amount - or at least that there's a meaningful route for the latter person to become the former person.
I also don't understand why Bill Gates giving $10B less to Africa doesn't count as reducing consumption. It's a use of money to exert his will on the world; I think that should count as consumption (and be taxed as a consumption tax).