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It disproportionately skews taxation toward those least able to make ends meet, and otherwise doesn't necessarily raise enough revenue to fund the needs of society.
So effectively progressive income tax helps make up for regressive sales taxes, regressive payroll taxes, etc., resulting in a pretty flat tax system (which, consequently, is far more onerous for those least fortunate than for others).
If you're talking about a federal sales tax, sales tax is already high enough in the states that levy such a tax. Adding a federal sales tax on top of the income tax would open the floodgates to greedy politicians. If you're going to tinker with the present-day tax structure, a flat income tax would be better than a new sales tax.
So effectively progressive income tax helps make up for regressive sales taxes, regressive payroll taxes, etc., resulting in a pretty flat tax system (which, consequently, is far more onerous for those least fortunate than for others).
Payroll taxes aren't really regressive. You are paying for your own retirement in FDR's original theory.
We could have a national sales tax that isn't regressive. We mail a check to low income people that would cover more than, all, or much of the cost of the sales tax.
If you're going to tinker with the present-day tax structure, a flat income tax would be better than a new sales tax.
With
poverty-level income, geographically-adjusted up or down based on place of residence;
plus an estimate of typical sales tax on purchases made with such income, geographically-adjusted up or down based on place of residence;
plus the amount paid in other taxes, such as property taxes, or, as is done in New Jersey, a fair share of rent that goes to pay the landlord's property taxes;
plus a small amount to support the opportunity to get one's self out of poverty
... exempt from all income tax, federal and state.
Otherwise, such a suggestion would be a grossly immoral marginalization of the poor.
I would prefer to eliminate the cap on SS taxable income and set the all income from all sources Income Tax deductable at the 95th percentile. Then the people that own the country would pay for maintaining the country while the rest of us saved for our retirement or invested in the market.
The downside of a sales tax is it reduces the cash flow rate and volume throughout the economy and cuts sales and profits for all. This costs both the manufacturers, sellers, buyers and the owners disproportionately. The buyers pay the greatest share of the tax for the least benefit.
Payroll taxes aren't really regressive. You are paying for your own retirement in FDR's original theory.
We could have a national sales tax that isn't regressive. We mail a check to low income people that would cover more than, all, or much of the cost of the sales tax.
Payroll taxes are regressive. They are the same rate regardless of income. Worse, Social Security tax stops at about $110,000, which means someone earning $100,000 a year pays the tax on every dollar while someone earning $500,000 only pays it on the first $110,000 and those who earn their income only from capital gains doesn't pay anything.
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