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Or just abolish sales tax. If the states want the money, they can just raise state income tax, which they're already charging, by a few percent. As it is now, i
by weberer 4y ago
Or just abolish sales tax. If the states want the money, they can just raise state income tax, which they're already charging, by a few percent. As it is now, it just complicates things and disincentivizes consumers from making purchases, which slows down the local economy.
- tptacek 4y agoIncome taxes deter saving and investment, but are easier to target. Sales taxes are hard to make progressive (they're usually regressive) and can be harder to enforce (if they're local). It depends on your goals. It sort of makes sense that we have both, at differing rates.
- Jolter 4y agoWhile I agree with you mostly, why wouldn’t you call sales tax progressive? The more you earn, the more you will spend, so the more you pay. The big issue I have with sales tax is that it is a much worse solution to the problem than a simple value-added tax (VAT). Most countries have figured out that VAT is more difficult to cheat.
- kneebonian 4y agoYes that is generally common sense reasoning but it is called regressive because then poor people spend a larger % of their income. Honestly seems like some mental gymnastics to me to argue that regressive is about what % of income is spent on taxes rather than amount of taxes paid but that's the argument.
- deleted 4y ago[deleted]
- tptacek 4y agoThat's the definition of a regressive tax.
- KMag 4y agoPoor people tend to spend a higher percentage of their income, and invest a lower percentage. So, they end up paying a higher percentage of their incomes in sales tax, on average.
- zeroonetwothree 4y agoThat’s true but on the other hand if you never spend money then it’s not providing you any advantage. Money is only useful if it’s spent. In that sense a flat sales tax is the “fairest” since it reflects the actual chosen consumption of that individual. (I know this isn’t true in practice because of exclusions from sales taxes, but we could imagine one that applied to all consumption.)
- tptacek 4y agoNo, another thing money does besides fueling consumption is fueling investment, which generates yet more money. There is some strange axiomatic derivation happening in this thread. The term "regressive tax" has a specific meaning; we can just start with that as an axiom, rather than re-deriving all of economics. A regressive tax is simply one that takes a higher percentage of income from low-income taxpayers than high-income taxpayers.
- deleted 4y ago[deleted]
- rudolph9 4y agoYou’re describing Oregon.
- kneebonian 4y agoIncome tax is generally state and federal, sales tax is usually municipal and county. It's a lot harder for a city to collect income tax than sales tax.