this post was submitted on 13 Nov 2024
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Lower income people spend - as a proportion of their income - far more of their income than higher income people. This makes the "nothing but sales taxes" approach much more regressive than it initially seems, despite often being touted by economists as a progressive approach to taxation.
Right, but a lot of lower-income people also spend a lot more of their income that they do get on base essentials, such as food, clothing, and housing, which would be considered base essentials and therefore not have sales tax. So your box of pasta would not have sales tax, but your new flat screen TV would. Reason being, the box of pasta will let you survive. But you cannot eat your flat screen TV.
You're missing the fact that a flatscreen TV will still often represent - as a portion of someone's wealth - a far greater cost than a private jet would to a billionaire. Consider that most low income people are getting their cell phones on payment plans, whereas a multimillionaire can afford to buy a Lamborghini Gellardo out of pocket. On top of that, high end purchases like cars, yachts, houses, fine art, etc, often retain a lot of their resale value, turning them into investments in many cases, often reselling for more than their purchase price. So yes, I absolutely did account for the tax exemptions on "essentials", and even when you factor those your sales tax only model still ends up being less onerous the more wealthy someone is.
I also want to call out the unspoken implication that is often present with these theories - not accusing you of doing this, but it needs to be said - that items like phones, computers and TVs are extraneous luxuries that no poor person should ever own, as if enjoying a fulfilling life or engaging in relaxation are things that only the wealthy should be allowed to have access to.
Thanks for pointing that out. I am definitely not saying that poor people should not have access to flat screen TVs and phones, etc. Because, especially with computing hardware, those kinds of things can very easily lift somebody out of poverty due to greater access to information and opportunities. However, I often see people struggling to afford basic necessities, and yet they have the newest iPhone every year or every other year, which is incredibly financially irresponsible.