Quote:
Originally Posted by Occasionally6
A GST is regressive because different proportions of high and low incomes are spent. An individual on, say, $100K/yr has significant discretion over how much to spend. An individual on, say, $25K/yr is likely to spend all of that just to survive.
If we arbitrarily set the GST at 20% with no other taxes:
Assuming 100% spending, the $25K/yr individual would pay $5K/yr in tax.
With an income of $100K/yr an individual might spend, and so pay tax on, $50k/yr (twice as much as the $25K/yr household) and then pay $10K/yr tax.
If those same taxes were assessed as income tax the $25K/yr individual would pay at a rate of 20% and the $100K/yr individual at 10%.
A flat rate of income tax is a bit fairer but is still regressive in effect because the unspent income is available for investment. It still tends to widen the gap between rich and poor and trap people in poverty.
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Assuming we are only talking about federal income tax, the person making $25k would pay $5k, and the person making $100k would pay $20k. If you make more money you pay more money. At the end of the day everyone pays the same proportion of their income as taxes. As far as goods and services, that is a separate state and local tax and is also a flat rate, so once again completely fair.
How did we get into tax policy again? lol
Investment should be encouraged, instead of discouraged as you seem to believe. The rich don't hold people in poverty. Everyone should be investing, no matter how much you make. If you plan to retire on social security alone you are in for a big surprise. The benefits of investing are available to everyone, not just the wealthy. Furthermore, it isn't up to the government to ensure people live the lives they want. If a person making $25k wants more money to spend after taxes they need to make more money or spend less.