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redpoint5
Human Environmentalist

Join Date: Aug 2010
Location: Oregon
Posts: 9,138

Acura TSX - '06 Acura TSX
90 day: 28.24 mpg (US)

Lafawnda - '01 Honda CBR600 F4i
90 day: 47.32 mpg (US)

Big Yeller - '98 Dodge Ram 2500 base
90 day: 21.82 mpg (US)

Prius Plug-in - '12 Toyota Prius Plug-in
90 day: 57.64 mpg (US)

Mazda CX-5 - '17 Mazda CX-5 Touring
90 day: 26.27 mpg (US)
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Quote:
 Originally Posted by JSH 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. 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.
Person A makes \$15,000
Person A spends 100% of \$15,000 in the following way:

\$9600 housing - tax free
\$2400 staple food - tax free
\$2400 healthcare - tax free
\$600 discretionary at 20% = \$120 tax, or 0.8% of income in taxes

Person B makes \$100,000 and spends 80% of it in the following way:

\$15,600 housing - 20% tax on 6000 of it - \$1200
\$2400 staple food - tax free
\$2400 eating out/not staple - 20% tax \$480
\$4800 healthcare - 20% tax on \$2,400 - \$480
\$54,800 discretionary at 20% = \$10,960
\$13,120 total tax, or 13% of income

As I've said before, investments are eventually cashed out. They will get taxed. This is a progressive structure that scales with spending, which is correlated with income.
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