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They are low cost items, but poor people also have less money to spend so that cancels out. Here's an example: Sales tax of 10%, poor person has an income of $
by CorrectHorseBat 6y ago
They are low cost items, but poor people also have less money to spend so that cancels out.
Here's an example: Sales tax of 10%, poor person has an income of $1000 per month and spends it all. 10%/$100 of income goes to tax.
Rich person has an income of $10000 per month. They spends $5000 and save $5000. 5%/$500 of income goes to tax. That's like a reverse progressive income, arguably very disadvantageous for the poor.
- austincheney 6y agoI already mentioned I have once been poor myself and know how this works. Your simplified arithmetic is not a comprehensive financial scenario. When I was poor we were dependent upon hand-me downs and school assistance programs to cover many of the essentials.
- CorrectHorseBat 6y agoHow does that change anything? You're just moving the burden to the nearly-poor who can't rely on those things. edit: don't forget that for your scheme to work we would need to increase sale tax. Unless you had zero income when being poor it would still negatively effect you.
- Turing_Machine 6y agoThere are ways around this. You could minimize the accounting by setting a rebate level, then issuing a check to everyone (yes, even the rich people) for that amount. To use your numbers, if you issued a rebate check for $100/month to everyone, the poor person would pay an effective rate of zero, while the rich person would still pay an effective rate of $400/month.
- CorrectHorseBat 6y agoThat just means you're moving the problem up a bit. The poor pay nothing, the rich pay relatively nothing and the middle class carries the highest burden.