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"But our tax system is inherently regressive!!1" Never understood how people can say that with a straight face knowing that more than _half of all Americans do

"But our tax system is inherently regressive!!1" Never understood how people can say that with a straight face knowing that more than _half of all Americans don't pay taxes_.

adgjlsfhk1 5y ago
It's regressive because pretty much every tax other than income tax is regressive. the 61% that didn't pay income taxes spend all the money they make, so they pay a much higher percentage of their income on sales tax, property tax (through rent), social security, gas taxes, tolls and stuff like that.
- adgjlsfhk1 5y ago
  Also having capitol gains taxed at a lower rate than income is regressive. Rich people aren't rich because they work. They're rich because they have money to invest. Our tax system should benefit people who work for a living over people that just pay other people to turn their money into more money.
  - bingohbangoh 5y ago
    You're taxed when you earn the money already. Taxing again at the point you deploy it is double taxation. Many countries don't tax capital gains at all because of this fact. Moreover, you want people to deploy their capital in the economy. Hiking taxes on capital gains would massively disincentivize people. Unlike other taxes, capital deployment is a risk based economic activity: if you raise taxes, people will be less inclined to invest it on risky ventures as opposed to keeping it in very safe assets (e.g. bank accounts or real estate).
- Aunche 5y ago
  They're only regressive if you're not considering what people are getting out of their taxes. Gas taxes pay for highways. Social security taxes pay for your retirement. The US has one of the most progressive tax systems in the world. The only benefit we seem to get out of it is that the poor and middle class end up spending more money on consumer goods. In the US, property taxes are so low such that they are uncorrelated with rent. The properties with the lowest tax rates thanks to Prop 13 also have some of the highest rents.
  - bingohbangoh 5y ago
    Property taxes are almost nonexistent in other countries normally thought of as having very high taxes (e.g. Sweden). [1] You may be thinking in California terms where property taxes are very low because of Prop 13. I can most assure you that this is not the case in New Jersey or New York. [1]: see point #3 -- https://www.vox.com/2016/4/8/11380356/swedish-taxes-love https://www.vox.com/2016/4/8/11380356/swedish-taxes-love
Spivak 5y ago
Nobody is saying that. Income tax is progressive -- some say not progressive enough but still progressive. Sales tax is regressive. Saying "half of all Americans don't pay taxes" is just wrong. The statement is "half of Americans don't owe any federal income tax". We all pay different taxes like sales tax, property tax (either directly or via rent), payroll tax, capital gains tax, state taxes, local taxes, etc, etc.
- colinmhayes 5y ago
  All of those other taxes, other than some state taxes, are regressive.
  - Spivak 5y ago
    I’m agreeing with you?
standardUser 5y ago
Payroll taxes and sales taxes are regressive. Taxes on income earned from possessing wealth are vastly lower than taxes on income from doing work.
- zionic 5y ago
  A just tax would be a consumption tax. Rich people consume more, so it makes sense and is fair to pay more to a society you consume more from. If you make a lot of money and live frugally why should you pay more?
  - thehappypm 5y ago
    No, that's not really fair. Someone poor might spend all their income on consumption to stay alive. Someone rich is going to save a lot of their income. Effective tax rates would be higher the poorer you are.
  - standardUser 5y ago
    "A just tax would be a consumption tax." I don't want a just tax I want a tax system that is effective. When vast amounts of wealth continually become concentrated in the hands of a tiny amount of people, the only effective tax regime is one that extracts wealth from the people who have all the wealth.
- bingohbangoh 5y ago
  Income taxes account for a much higher proportion of tax revenues for the government -- like a lot lot more. Think twice as much.
  - standardUser 5y ago
    Obviously that depends on which level of government we are talking about. Local governments are usually not funded by income taxes, same with a lot of state governments. They are almost entirely funded by more regressive taxes.
The-Bus 5y ago
> more than _half of all Americans don't pay taxes_ I think the only Americans without a real tax burden are children. Even someone destitute who spends $5 on a fast food meal may pay taxes on it. Taxation is a complex topic, and reducing it to statements like CNBC's headline is not very helpful.
- adolph 5y ago
  Children are taxed through their parents much as renters pay the property taxes of property owners. The difference is that children are taxed without representation since the vote is withheld from them and their stewards.
GaryTang 5y ago
There are still 39% of Americans paying income tax. They should be frankly outraged.

"But our tax system is inherently regressive!!1" Never understood how people can say that with a straight face knowing that more than _half of all Americans don't pay taxes_.

adgjlsfhk1 5y ago

It's regressive because pretty much every tax other than income tax is regressive. the 61% that didn't pay income taxes spend all the money they make, so they pay a much higher percentage of their income on sales tax, property tax (through rent), social security, gas taxes, tolls and stuff like that.

adgjlsfhk1 5y ago
Also having capitol gains taxed at a lower rate than income is regressive. Rich people aren't rich because they work. They're rich because they have money to invest. Our tax system should benefit people who work for a living over people that just pay other people to turn their money into more money.
- bingohbangoh 5y ago
  You're taxed when you earn the money already. Taxing again at the point you deploy it is double taxation. Many countries don't tax capital gains at all because of this fact. Moreover, you want people to deploy their capital in the economy. Hiking taxes on capital gains would massively disincentivize people. Unlike other taxes, capital deployment is a risk based economic activity: if you raise taxes, people will be less inclined to invest it on risky ventures as opposed to keeping it in very safe assets (e.g. bank accounts or real estate).
Aunche 5y ago
They're only regressive if you're not considering what people are getting out of their taxes. Gas taxes pay for highways. Social security taxes pay for your retirement. The US has one of the most progressive tax systems in the world. The only benefit we seem to get out of it is that the poor and middle class end up spending more money on consumer goods. In the US, property taxes are so low such that they are uncorrelated with rent. The properties with the lowest tax rates thanks to Prop 13 also have some of the highest rents.
- bingohbangoh 5y ago
  Property taxes are almost nonexistent in other countries normally thought of as having very high taxes (e.g. Sweden). [1] You may be thinking in California terms where property taxes are very low because of Prop 13. I can most assure you that this is not the case in New Jersey or New York. [1]: see point #3 -- https://www.vox.com/2016/4/8/11380356/swedish-taxes-love https://www.vox.com/2016/4/8/11380356/swedish-taxes-love

Spivak 5y ago

Nobody is saying that. Income tax is progressive -- some say not progressive enough but still progressive. Sales tax is regressive. Saying "half of all Americans don't pay taxes" is just wrong. The statement is "half of Americans don't owe any federal income tax". We all pay different taxes like sales tax, property tax (either directly or via rent), payroll tax, capital gains tax, state taxes, local taxes, etc, etc.

colinmhayes 5y ago
All of those other taxes, other than some state taxes, are regressive.
- Spivak 5y ago
  I’m agreeing with you?

standardUser 5y ago

Payroll taxes and sales taxes are regressive. Taxes on income earned from possessing wealth are vastly lower than taxes on income from doing work.

zionic 5y ago
A just tax would be a consumption tax. Rich people consume more, so it makes sense and is fair to pay more to a society you consume more from. If you make a lot of money and live frugally why should you pay more?
- thehappypm 5y ago
  No, that's not really fair. Someone poor might spend all their income on consumption to stay alive. Someone rich is going to save a lot of their income. Effective tax rates would be higher the poorer you are.
- standardUser 5y ago
  "A just tax would be a consumption tax." I don't want a just tax I want a tax system that is effective. When vast amounts of wealth continually become concentrated in the hands of a tiny amount of people, the only effective tax regime is one that extracts wealth from the people who have all the wealth.
bingohbangoh 5y ago
Income taxes account for a much higher proportion of tax revenues for the government -- like a lot lot more. Think twice as much.
- standardUser 5y ago
  Obviously that depends on which level of government we are talking about. Local governments are usually not funded by income taxes, same with a lot of state governments. They are almost entirely funded by more regressive taxes.

The-Bus 5y ago

> more than _half of all Americans don't pay taxes_ I think the only Americans without a real tax burden are children. Even someone destitute who spends $5 on a fast food meal may pay taxes on it. Taxation is a complex topic, and reducing it to statements like CNBC's headline is not very helpful.

adolph 5y ago
Children are taxed through their parents much as renters pay the property taxes of property owners. The difference is that children are taxed without representation since the vote is withheld from them and their stewards.

GaryTang 5y ago

There are still 39% of Americans paying income tax. They should be frankly outraged.