Regressive Taxation 101

The Daily Kos has this great article on regressive taxes - the same message TFT has been sharing for years, and will continue to share until our upside-down tax structure is turned rightside up and provides a level playing field for low- and middle-income families and enough revenue to adequately support our public structures we all need to grow and thrive in our state.
Some excerpts:

More than 80% of Americans are burdened more by state and local sales taxes alone than they are by income taxes. Only for the top 1% of earners do income taxes take a greater percent of their income than sales and property taxes.

Why is this? Because most Americans do something really interesting with the money that comes their way: they spend it. They buy food. They buy clothes. They buy toothpaste, toys, tool chests and toilet paper. Through that spending, they create demand. What doesn't get spent on consumables gets turned into the kind of long term assets that most people need to get by in the world. It turns into a roof over their heads and transportation to get to work. Which creates more demand. More jobs.

By spending their money, the majority of Americans fuel the health of the economy. They're the juice in the system. The churn. The fire in the boilers.

Meanwhile, up at the top end of the scale, those top 1% of earners don't neither spend their income or turn it into property. They don't consume it. They don't convert it. They just sit on it. This chart alone is enough to demonstrate that cutting the tax for those at the top is worse than pointless. The very rich are not turning their money into things / demand / jobs. They have so much more than they need that their money is simply stagnant. Sending them more cash would be no more effective than throwing it into a volcano.

Unfortunately, those spending and converting actions that most Americans engage in are attacked by regressive systems that hit from dollar one. These are not invisible taxes. They're all too visible. They're part of every transaction, large or small. They're the reason your dollar bag of pretzels can't be purchased with a dollar. They're the reason that new Chevy or Ford costs you extra both when you buy it and every year you own it.

The overall impact of eliminating sales tax and most income tax deductions is that over 80% of Americans would pay less tax and the tax directly eliminated would be the one they face every day in their transactions.


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