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So, I've heard that sales tax is a regressive tax, which means that it takes more out of a poor persons income proportionately than it does a rich person. Is this true?
Also, sales tax supposedly reduces the marginal propensity to consume and raises the marginal propensity to save. Is this true, and is sales tax the best way to do this? Oaktonite, wherever he is, stated another way of increasing marginal propensity to save by making savings as a tax deductible form of income. Is this a more effective way of increasing the marginal propensity to save?
Is a sales tax a fair tax in that only the people who spend money are the people who get taxed?
So what do you think would be the ideal rate of sales tax? 0%? 5%? 40%?
For this discussion, let's ignore Pegouvian taxes, which are taxes on specific items in order to reduce demand. Lets only consider the sales tax on all good.
Since there is no reason to think that income taxes are going away AND plenty of opportunity to have VERY detailed information about consumption it should be possible to do lots of things to collect a range of sales tax(es) AND "tweak" the dedications / rebates. Personally I would like to see uniformity of sale tax -- if neighboring states all had "zero" that would be excellent in my view, but I would also be ok with maybe 5% ...
As far as other ways to encourage savings I wonder what the effect of having some kind of "bonus" might be -- it would simple to do something like Discover Card once did -- when they would send their "rebate" for card usage there was also an option to get a better rate if you used the check to open an account at their bank. Might be interesting to see how many folks would rethink a rebate check from the IRS if you could get a bonus rate by redeeming it for savings bonds...
So, I've heard that sales tax is a regressive tax, which
means that it takes more out of a poor persons income proportionately than it does a rich person.
Is this true?
Yes it is.
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...only the people who spend money are the people who get taxed?
That depends on what category of purchase is taxed (or exempt from them).
So, I've heard that sales tax is a regressive tax, which means that it takes more out of a poor persons income proportionately than it does a rich person. Is this true?
Yes. Its a tax on labor and industry.
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Also, sales tax supposedly reduces the marginal propensity to consume and raises the marginal propensity to save.
It increases the propensity to have ponzi schemes.
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Is this true, and is sales tax the best way to do this?
The best way to stop consumption is to die.
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Oaktonite, wherever he is, stated another way of increasing marginal propensity to save by making savings as a tax deductible form of income. Is this a more effective way of increasing the marginal propensity to save?
What is being saved? Financial saving(based on debt) nets to zero.
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Is a sales tax a fair tax in that only the people who spend money are the people who get taxed?
So what do you think would be the ideal rate of sales tax? 0%? 5%? 40%?
The negative reinforcement and punishment of using goods and services should be 0%.
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For this discussion, let's ignore Pegouvian taxes, which are taxes on specific items in order to reduce demand. Lets only consider the sales tax on all good.
What is there to discuss? It has been proven to be a dead weight tax on industry. The tax is useless on basic necessities especially since no one stops buying them. It just raised the cost of doing business. The only good tax of that nature is the gas tax, which is really a road and basic resource user fee. That is to say it is not merely about products of human labor. Taxes do not discourage the earth.
It increases the propensity to have ponzi schemes.
The best way to stop consumption is to die.
What is being saved? Financial saving(based on debt) nets to zero.
The negative reinforcement and punishment of using goods and services should be 0%.
What is there to discuss? It has been proven to be a dead weight tax on industry. The tax is useless on basic necessities especially since no one stops buying them. It just raised the cost of doing business. The only good tax of that nature is the gas tax, which is really a road and basic resource user fee. That is to say it is not merely about products of human labor. Taxes do not discourage the earth.
Let me clarify, oaktonites idea was to make what you saved from your already earned income tax deductable, not borrowing to increase savings.
And how is sales tax more of a drain on the economy than income tax? Don't they both tax labor and industry?
And why we would want a higher marginal propensity to save is another discussion, I'm just wondering if sales tax does raise it?
The growth of the internet was partly funded by people not paying sales tax. In human terms, a sales tax is a depressant.
As taxes are increasingly used to enforce additional restrictions, such as the costs of "enhanced" police presence, zoning restrictions, environmental laws, etc., I would say that sales taxes are a double whammy against economic growth.
Let me clarify, oaktonites idea was to make what you saved from your already earned income tax deductable, not borrowing to increase savings.
And how is sales tax more of a drain on the economy than income tax? Don't they both tax labor and industry?
False dichotomy. Income tax is another dead weight tax on industry as a direct tax on labor. It is no better than excise taxes.
And yes the tax debate is so bad and so barren of the historical frame work, you , like most people, don't even know which taxes do not carry a burden on industry. It has fallen from our collective memory. However I will not bother unless you are really interested.
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And why we would want a higher marginal propensity to save is another discussion, I'm just wondering if sales tax does raise it?
Saving is far too ambiguous a term in financial economies. There is capital savings , and then there are those which represent someone else's debt. Let me give you a Robinson Crusoe example:
Suppose you share the island with Robinson Crusoe and you have stored 100 salted fish . Is that savings?
Suppose again you do something for Robinson Crusoe where he promises you 100 salted fish.
Now in which case do you have equity in 100 salted fish that does not net to zero between you and Robinson Crusoe?
I don't think it is particularly regressive as long as it is not charged on food and housing.
Beyond that, the people with money to spend are the people who pay.
Real estate tax can be very regressive because having spent one's entire life paying off a house does not mean that one has an enormous income after retiring. So people trying to live on small retirement and SS will lose their house because they don't have enough income to pay the taxes on it. That's pretty cruel.
Sales tax at 5%-10% apparently is not enough for the government , because all the states are whining about being broke and not enough money to provide services. If you get too much above that, it becomes a hardship on the low income people.
In our area the sales tax used to be the same from city to city within Ventura County. That changed a year or two ago. I work in Ventura where the tax is 7.25% I think, and live in Oxnard where it is 8%. Since both cities are next to each other what is going to stop me from shopping in Ventura? I have no need to purchase things in Oxnard as I can buy in Ventura and save a little on the taxes.
I have heard though that when you purchase a big ticket item you can get burned. When you buy a car you end up paying the sales tax for the city that you live in and it does not matter that I buy it in Ventura.
I don't think it is particularly regressive as long as it is not charged on food and housing.
Beyond that, the people with money to spend are the people who pay.
Real estate tax can be very regressive because having spent one's entire life paying off a house does not mean that one has an enormous income after retiring. So people trying to live on small retirement and SS will lose their house because they don't have enough income to pay the taxes on it. That's pretty cruel.
That depends on the gentrification of the neighborhood. If the location is not rising in value then it is certainly not a fair tax to increase it. If it it declining then it should even be lowered.
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Sales tax at 5%-10% apparently is not enough for the government , because all the states are whining about being broke and not enough money to provide services. If you get too much above that, it becomes a hardship on the low income people.
The reason why they are whining is because most of them have under taxed their real estate, allowing bank credit to flow into the region, which drove up the wages of public servants. See any problem with wages and prices being set on a money supply temporarily borrowed into existence?
So basically there is no equity left in the real estate to tax thanks to mortgages and bankster interest collection. The now stagnant wages are no longer being fueled by the credit binge. So the state private sector is caught between the rapacity of banksters then their public leaches that were addicted to the easy money.
Can't just keep punishing industry endlessly now can you?
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