The chief liberal argument against sales and use taxes such as taxes on gasoline, cigarettes, and so on is that they disproportionately tax the poor while sparing the rich. This is supposed to be a bad thing, and if they truly took food out of the mouths of the poor or clothing off their bodies, these taxes would be truly wicked. They'd violate God's command to make sure that the poor have food and shelter.
However, apart from property taxes, essentials like food, clothing, and shelter are not generally taxed. Sales and use taxes are levied on nonessentials like electronics, cigarettes and alcohol, vehicles and gasoline. It's well-known that one of the reasons many poor people remain poor is--they're paying for (and abusing their bodies with) electronics, cigarettes and alcohol, vehicles and gasoline.
On the flip side, nonregressive taxes like the progressive income tax reduce the rewards of work. So when we insist on "no regressive sales taxes" and fund our government with income taxes, we're actually making the situation worse for the poor (and everyone) by encouraging spending and discouraging work.
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7 comments:
The worst about income tax is when you've just barely crossed into the next bracket. You may end up earning less than before. The luxury tax is a good ave for use taxes b/c if you can afford a $3 million yatch, paying the extra tx isn't goint to hurt.
Here in Mississippi we have a 6.25% sales tax on everything, including food. They are talking about an excise tax on items such as alcohol and tobacco.
I might end up paying a little more for my cigars!
Actually, MercyNow, the higher rates are only on additional income, so the scenario you describe doesn't quite exist.
The scenario that does exist; the tax brackets don't move with inflation, so there is very real bracket creep. There is also the alternative minimum tax, which actually can give people less money (in dollar, not real terms) out of more income.
But, if we lower the cost of items/services by ensuring that they are made/done by low cost offshore/illegal labor, we'll all have more spending power in our $s.
:^/ If we still have jobs, that is...
Yeah, I never thought about the bracket creep. Was the last major overhaul of tax laws in the mid 80's or was there another one since?
As to illegal labor, I'm still processing through it b/c if you legalize the 11 mill immigrants, then they would take over a lot more legal jobs from the current blue collar market, putting those workers out of jobs. On the other hand, if you don't legalize them, they are not taxed but they use up public services which we pay for.
Interestingly enough - sales tax is paid by illegal immigrants.
Actually, quite often income tax is as well - false or "shared" Social Security Numbers are used quite frequently, but tax forms are rarely filed to claim refunds.
Since most studies on the economic impact of illegal aliens are speculative, we really won't know until we legalize them. ;)
As to the question of lost jobs in the blue collar market - the logic is circular. Please see Credo number 9.
I'd also love to see the study that legitimizes this statement:
"one of the reasons many poor people remain poor is they are paying for (and abusing thier bodies with) electronics, cigarettes and alcohol, vehicles and gasoline."
I'm also curious about how vehicles and gasoline are used to abuse their bodies.
Thanks for listening.
Peace,
Matt
Matt
You could make the same argument regarding electronic entertainment--and to be sure, I was primarily getting at (and evidently misspelling) the damage done by cigarettes and excessive use of alcohol.
That said, using a vehicle when one could easily walk or ride a bike, or watching the idiot box when one could be doing something interesting, does have its effects on one's health, no?
The main point here is that what primarily keeps the poor poor in this country is the purchase of non-essentials, and that it's not therefore cruel to tax them instead of incomes--just the opposite.
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