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In terms of what the phrase "regressive tax" colloquially means it is clear that sales tax is a regressive tax. The percent of wealth poor person pays in sales

In terms of what the phrase "regressive tax" colloquially means it is clear that sales tax is a regressive tax. The percent of wealth poor person pays in sales tax is greater than the percent of wealth a rich person pays in sales tax. Of course if the poor person wins a billion dollar lottery the next day then for that person it is no longer true. Thus, this is why when talking about this issue it generally is the case that we are talking about the here and now and don't factor in lifetime earnings and whatnot.

yummyfajitas 12y ago
Colloquially, "progressive" usually means "w.r.t. income". I.e., dMarginalTaxRate/dIncome is positive. By definition, a sales tax is not regressive w.r.t wealth - dMarginalSalesTaxRate/dWealth = 0. The fact that consumption / wealth goes down up as money is shifted from savings to consumption is simply a mathematical identity and not very interesting. I.e.: (consumption + 1) / (wealth - 1) > consumption / wealth
- yequalsx 12y ago
  The percent of income (let's include capital gains for the year since this is where really rich people derive the increase in their 'money') paid in sales tax by a rich person is far less than that of a poor person for a given year. Thus, in the minds of the general populace, sales tax is considered regressive. This is what people mean when they say this. The effect of a sales tax on food for a poor person is far more detrimental to them than a sales tax on food for a rich person. Thus many people find this to be regressive.
  - yummyfajitas 12y ago
    As I said, the idea that a sales tax is regressive is simply an artifact of your measurement period. The "rich person" you describe is simply a saver - at some future point he will become a consumer. Literally the only reason the tax appears regressive in year A is because the act of saving has shifted the taxes to year B > A. This is an artifact of your measurement period and vanishes in the long term.
    - rahimnathwani 12y ago
      the idea that a sales tax is regressive is simply an artifact of your measurement period But people have finite lifespans. When all is said and done, who do you think will have paid more sales tax (and VAT) as a proportion of their total income: A) Bill Gates B) Me Before you answer, please also imagine an alternate world in which Bill Gates isn't so generous, and in which there are no estate taxes.
      - yummyfajitas 12y ago
        There are two possibilities. One is that Bill Gates and his descendents spend everything. In that case, the sales tax paid is the same. The other possibility is that some of Bill Gates' money is never consumed. In this case it's effectively a tax of 100% - Gates produced wealth for the world and was never compensated for it. If the rich escape sales taxes, it's only because they provide benefits to the world without being compensated for it. Complaining about that is pretty silly, as is focusing on sales taxes while ignoring this.
        rahimnathwani 12y ago
        Yes, but now you're bringing Bill's descendants into the discussion. I agree with your extension of the term regressive to include an arbitrarily long time frame, but I don't buy the inclusion of an abitrarily long line of descendants. On your other point, I'm not complaining. I was just stating the fact that I will pay more sales tax (as a proportion of my lifetime income) than a richer person like Bill Gates. So, by the common definition of 'regressive tax', sales tax is a regressive tax. I'm not saying this is good or bad or neutral. Just that it is so, by definition. (BTW I don't like the term regressive tax, because the term 'regressive' sounds intuitively negative.)

yummyfajitas 12y ago

Colloquially, "progressive" usually means "w.r.t. income". I.e., dMarginalTaxRate/dIncome is positive. By definition, a sales tax is not regressive w.r.t wealth - dMarginalSalesTaxRate/dWealth = 0. The fact that consumption / wealth goes down up as money is shifted from savings to consumption is simply a mathematical identity and not very interesting. I.e.: (consumption + 1) / (wealth - 1) > consumption / wealth

yequalsx 12y ago
The percent of income (let's include capital gains for the year since this is where really rich people derive the increase in their 'money') paid in sales tax by a rich person is far less than that of a poor person for a given year. Thus, in the minds of the general populace, sales tax is considered regressive. This is what people mean when they say this. The effect of a sales tax on food for a poor person is far more detrimental to them than a sales tax on food for a rich person. Thus many people find this to be regressive.
- yummyfajitas 12y ago
  As I said, the idea that a sales tax is regressive is simply an artifact of your measurement period. The "rich person" you describe is simply a saver - at some future point he will become a consumer. Literally the only reason the tax appears regressive in year A is because the act of saving has shifted the taxes to year B > A. This is an artifact of your measurement period and vanishes in the long term.
  - rahimnathwani 12y ago
    the idea that a sales tax is regressive is simply an artifact of your measurement period But people have finite lifespans. When all is said and done, who do you think will have paid more sales tax (and VAT) as a proportion of their total income: A) Bill Gates B) Me Before you answer, please also imagine an alternate world in which Bill Gates isn't so generous, and in which there are no estate taxes.
    - yummyfajitas 12y ago
      There are two possibilities. One is that Bill Gates and his descendents spend everything. In that case, the sales tax paid is the same. The other possibility is that some of Bill Gates' money is never consumed. In this case it's effectively a tax of 100% - Gates produced wealth for the world and was never compensated for it. If the rich escape sales taxes, it's only because they provide benefits to the world without being compensated for it. Complaining about that is pretty silly, as is focusing on sales taxes while ignoring this.
      - rahimnathwani 12y ago
        Yes, but now you're bringing Bill's descendants into the discussion. I agree with your extension of the term regressive to include an arbitrarily long time frame, but I don't buy the inclusion of an abitrarily long line of descendants. On your other point, I'm not complaining. I was just stating the fact that I will pay more sales tax (as a proportion of my lifetime income) than a richer person like Bill Gates. So, by the common definition of 'regressive tax', sales tax is a regressive tax. I'm not saying this is good or bad or neutral. Just that it is so, by definition. (BTW I don't like the term regressive tax, because the term 'regressive' sounds intuitively negative.)