Dr.Who
Well-Known Member
From Wikipedia:
"A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.[1][2][3][4][5] In simple terms, a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich"
http://en.wikipedia.org/wiki/Regressive_tax
So for example, a tax on gasoline is considered to be a regressive tax because the poor person who earns $12,000 per year and pays $500 dollars per year in gas taxes pays more as a percent of his income than the person who earned $200,000 per year and pays $600 per year in gas taxes.
What about income tax?
The middle class person who earns $80,000 per year may be in the 28% tax bracket while the rich person who earns $900,000 may be in the 39% tax bracket. That certainly sounds progressive. But in reality income tax is regressive too. The way it is set up the middle class person may actually pay less than 28% since he gets exemptions and deductions. The actual amount paid might be 20% or less. For the rich person much of his income will be investment income which is only taxed at 15%. The little that is earned income will still be small after exemptions and deductions. On average rich people pay only 18% of their total income. But that is only part of the story. The rich person might own a business while the middle class person most likely works for a business. When the rich person gets taxed he simply takes more profit from his business which means he raises the price of whatever he makes or sells. The guy who works at that business has no one he can raise prices on. Sure he can ask for a raise but that is up to his boss. The short of it is that the rich guy always passes his burden on to someone else. And the one who actually feels the greatest burden is the poor guy.
What about carbon taxes. If the price and cost of operating of every single thing that emits carbon into the air goes up 10% the rich guy passes that on but the poor guy might have to wait a few more years before getting a newer used car, will pay more at the pump, will pay more at the checkout, will get less raises, will face more competition, etc.
The fact of the matter is that every single tax out there places a larger burden on the poor guy than it does on the rich guy. The only way to equalize that burden is to reduce taxes as much as possible. A zero percent tax is the only one that is truly not regressive.
"A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.[1][2][3][4][5] In simple terms, a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich"
http://en.wikipedia.org/wiki/Regressive_tax
So for example, a tax on gasoline is considered to be a regressive tax because the poor person who earns $12,000 per year and pays $500 dollars per year in gas taxes pays more as a percent of his income than the person who earned $200,000 per year and pays $600 per year in gas taxes.
What about income tax?
The middle class person who earns $80,000 per year may be in the 28% tax bracket while the rich person who earns $900,000 may be in the 39% tax bracket. That certainly sounds progressive. But in reality income tax is regressive too. The way it is set up the middle class person may actually pay less than 28% since he gets exemptions and deductions. The actual amount paid might be 20% or less. For the rich person much of his income will be investment income which is only taxed at 15%. The little that is earned income will still be small after exemptions and deductions. On average rich people pay only 18% of their total income. But that is only part of the story. The rich person might own a business while the middle class person most likely works for a business. When the rich person gets taxed he simply takes more profit from his business which means he raises the price of whatever he makes or sells. The guy who works at that business has no one he can raise prices on. Sure he can ask for a raise but that is up to his boss. The short of it is that the rich guy always passes his burden on to someone else. And the one who actually feels the greatest burden is the poor guy.
What about carbon taxes. If the price and cost of operating of every single thing that emits carbon into the air goes up 10% the rich guy passes that on but the poor guy might have to wait a few more years before getting a newer used car, will pay more at the pump, will pay more at the checkout, will get less raises, will face more competition, etc.
The fact of the matter is that every single tax out there places a larger burden on the poor guy than it does on the rich guy. The only way to equalize that burden is to reduce taxes as much as possible. A zero percent tax is the only one that is truly not regressive.