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Old 05-16-2019, 03:44 PM   #51 (permalink)
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Originally Posted by redpoint5 View Post
Perhaps regressive from what we have now, but not by the definition of regressive. It would be neutral in that sense, and as I've said, if you don't tax the first x number of dollars for certain necessary expenses such as food, housing, and healthcare, it makes the tax progressive.

I'd take an overhauled income tax over the horrid tax code we've got now though.
The definition of a regressive tax is when lower income people pay a greater percentage of their income than higher income people. Sales taxes are regressive because lower income people spend a greater percentage of their income.

Let's pretend the FairTax was law and we had a 30% sales tax that replaced all other federal taxes.

JSH circa 2000 spends 85% of his income. 85% x 30% = 25.5% effective tax
JSH circa 2018 spends 27% of his income. 27% x 30% = 8.1% effective tax

JSH 2018 makes 5X more than JSH 2000 but pays a much lower tax rate.

The only way not taxing some items would make a sales tax more progressive is if you made those exemptions based on income. Then your sales tax is no longer simple.

Originally Posted by rmay635703 View Post
Something like 90% of the IRS $2.5 billion budget is devoted to collect 5% of taxes owed, and 2.5b leaves out ancillary, indirect and cost to society

Taxing The lower 60% of the population is more or less a waste of time
You originally said "collecting personal income tax doesn’t Break even anyway."

That is a very different statement than saying collecting income taxes from the bottom 60% is a waste of time.

The second statement is basically true. The top 50% of households pay 97% of Federal income taxes.

However, the IRS isn't just a tax collection agency. Back in the 80's and early 90's we decided to turn the IRS into a welfare agency as well. This happened when we decided we didn't like giving the poor and lower working class direct welfare payments. Instead we would make them file a tax return and get a big tax "return" once a year. We decided to replace direct welfare payments with refundable tax credits.

NOTE: By "we" I mean the collective nation as a whole.

Again, it doesn't have to be this complicated. Income taxes could still be progressive and not require a tax return for the vast majority of people. The payroll tax has two different rates (it is regressive) and it comes directly out of our paychecks

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