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Why sales tax is regressive? I keep hearing this but I don't understand why it is regressive.
by didip 4y ago
Why sales tax is regressive? I keep hearing this but I don't understand why it is regressive.
- dragonwriter 4y ago> Why sales tax is regressive? Because it consumes a greater marginal share of income at lower income levels, which is the definition of a regressive tax.
- kccqzy 4y agoWhy don't you read the article which contains an explanation of why sales tax is regressive. > Sales tax is already notoriously regressive—that is, it places a larger burden on low-income taxpayers. There are no brackets or marginal rates in sales tax. Whether you make $100 or $100 million, your sales tax in Cupertino is 9.125% of the taxable purchase. The result is the portion of individual income that goes to paying sales tax is invariably higher in lower income individuals than it is in higher income folks.
- HWR_14 4y agoSo, in the tax system, the terms describe percentages of income/assets taken from the taxes. Progressive taxes charge a higher percentage from richer people than poorer people. Flat taxes aim to take the same percentage from everyone. Regressive taxes charge poorer people a higher percentage of their income. People say sales taxes are regressive because the cost of things that people buy usually increases slower than the income to support it. Very poor people spend (over) 100% of their income. Richer people do not - they save for retirement and other things. And if they want to buy toys, they might be very expensive toys (eg a yacht). It is worth going to a place without the sales tax to make a large purchase.