Why are Sales Taxes and Flat Rate Income Taxes not considered as Progressive rather than Regressive?

Question

Sales Taxes and Flat Rate Income Taxes should be considered Progressive as opposed to being considered regressive.


It is much more difficult to "cheat" on a Sales Tax.

Sales Taxes tax only the money that people spend, i.e., if you are
in a low income bracket you spend less and therefore your taxes are lower.

Flat rate income taxes have proven to raise more money than those incomes taxes which increase the rate of taxation as income increases.


Sales Taxes and Flat Rate Taxes have been proven to increase revenue and increase prosperity in foreign countries where they have been tried.


The label "Regressive", coined by a Socialist, has been proven be be wrong and negatively impacts the concept of the proper method of Taxation.

It has, however, been quite effective as a propaganda tool..

Answer 1

It is fatuous to say that the terms "Regressive" and "Progressive"
are not politically oriented.

They not only are politically oriented but are considered so by a huge majority of the voting public.

The argument offered up by "Dim Democrat" is totally accurate.

A National Sales Tax and a National Flat Rate Income Tax would do marvels for the economy of our Country provided that they were not used by Corrupt Politicians to satisfy their "Lust for Spending".

This is no doubt what would happen if the "Tax and Spend" Democrats gained a majority in the coming election and was used to promote their "Culture of Corruption".

I think that "Dim Democrat" is perhaps not so "Dim" as he professes to be.

Answer 2

The term "progressive taxation" is more a social description than an economical one. A progressive tax places more of the tax burden on people who have higher income, ie the current income tax. The more money you earn, the higher the percentage of that money you owe.

Sales taxes and Flat rate taxes impact lower wage earners more dramatically than more affluent people. A person making $30,000 a year who has to spend $10,000 on basic needs for his family will pay a much higher percentage of his total income in taxes than a person who makes $100,000.a year but still needs the same $10,000 in basic goods.

A solution to this is to set a level of earnings that will be tax free, say the first $15,000 earned yearly. This allocates enough money to pay for basic needs and any money earned over that amount will be taxed at the same rate regardless of how much it is.

Answer 3

The term regressive tax means that it takes a bigger bite from the poor than the rich. Poor people spend a much bigger percentage of their income on items that have sales tax. The rich spend more money, but much of it is on luxury items, the poor have no choice they have to spend a much bigger percentage of their income on food, clothing, shoes, etc. Flat rate tax taxes the poor schmo who earns minimum wage or $20 grand a year the same as the person who earns $20mil a year. The $20 mil guy can afford it much more than the $20 grand guy. This seems obvious to me.

Answer 4

Because the same rate is used for everyone. Those at the lower end of the income levels are therefore paying a much greater percentage of their income in taxes than those at the upper levels. The sales tax and a flat rate income tax would hurt the younger taxpayer because they are the ones havings families and bud houses that have to be fed, clothed and furnished. Old people put more in savings because they have already bought most of what they need.

Answer 5

open4one just about had it right. Progressive and regressive are terms (largely political) used to label how a sales/flat rate tax is functionally related to essentials required by families at lower and higher incomes.

Poverty-level income earners pay a greater percentage of their earnings in taxes, than do higher-level income earners, and have less left over for investment and leisure.

However, high income earners are likely to spend more on leisure, and would pay more in sales taxes - however, this may in many cases constitute a lesser percentage of their overall income than lower income earners.

Still, however, as mentioned by "Dim Democrat," it IS progressive in that the wealthy person buys more thus pays more taxes.

There IS a tax plan - presently a bill in Congress (HR25 / S25) called the FairTax Bill that addresses this so-called "regressivity" by issuing "family units" (which could also be an individual living alone) a check at the beginning of the month (called a "prebate") that would act as an advace reimbursement on the taxes the family unit is likely to pay in that month, based on statistics provided and updated by Health and Human Services (e.g., an individual would receive about $200, and a family of four would receive about $500).

At the same time, the tax on income (individual and business) would be abolished, as would payroll taxes, the cost of compliance would be reduced (some 6 billion human hours would be returned to individuals or business, now presently required by both to meet compliance with the tax code), prices would fall an average of 22%, add back a 29.9% FairTax (sales tax) - and prices would stay relatively stable (thanks to increased business competition ushered in by reduced cost of producing goods and services).

The added bonus is that individuals would keep their whole paycheck, and the IRS would cease to exist to conduct audits, assess interest and penalities and expose families to undue duress - financially, psychologically, socially (fewer divorces, greater family stability) - even deprive people of their freedom by prosecuting them and jailing them (despite years of having contributed to the economy).

The income tax system is failing, and will have to be revised. The problem of effecting true tax reform, however, is that politicians and lobbyists have come to rely upon the power and privilege that accompanies continually changing the income tax code for social engineering and business advantage purposes, respectively.

The other problem is the hidden tax to consumers by taxing business, and the inability of removing these taxes (embedded in costs/prices) prior to export. The U.S. is at a 22% disadvantage globally, because of the costs associated with taxes, planning and compliance - are not able to be extracted from products prior to export. The FairTax solves this problem by being able to jettison the (29.9% tax on the item price - or, to compare it like an "final cost inclusive" income tax rate, 23% of the total cost of the item - to U.S. citizens, without consideration of prebate or state sales taxes).

The other common sense goal achieved is that the current "underground economy" which depends on hiding income, now becomes a part of the tax base. When the drug dealer buys his "bling," he pays the tax at the cash register.

Another benefit is that visitors, and illegals (not having a social security card) will pay the full 23% (inclusive) rate on purchases and will not receive the monthly prebate which will is an applied rate reduction.

You can learn more, and support this effort if you like, by visiting http://fairtax.org and signing their citizen petition.

Answer 6

The terms "progressive" and "regressive" as applied to tax has nothing to do with politics.

Progressive means that as income goes up, tax rate goes up. They progress together.

Regressive means that as income goes up, tax rate goes down. As income progresses, the tax rate regresses, as in it does not go progressively higher.