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TAXES: Sales tax is regressive, unpredictable

Letter by Al Hurst, Gig Harbor on Jan. 27, 2012 at 1:24 pm with 36 Comments »
January 27, 2012 1:31 pm

Re: “Income tax more equitable” (letter, 1-26).

I agree with the letter writer about an income tax for Washington residents. I would add one requirement, however: that the sales tax be eliminated totally.

The sales tax has a number of flaws. It is discretionary, it reduces purchasing power, it is unpredictable and regressive.

A graduated income tax that would replace the sales tax would provide a far more stable base from which to budget and would be much fairer than the current system.

Leave a comment Comments → 36
  1. tommy98466 says:

    I agree with you Al. The only problem is that the politicians in Olympia won’t do away with the sales tax. Ever.

  2. BigSwingingRichard says:

    From a public policy perspective, incomes and income taxes fluctuate wildly during business cycles, much more than sales or property taxes, especially when they are progressive towards upper income taxpayers.

    The US federal deficit is a prime example of this phenomena.

    The States of California, Massachusetts, New Jersey (and others) have significant budget deficits due their over reliance on income taxes. Income taxes increase too much during strong economies and fall too fast during recessions. The inability to predict the length and depth of any economic cycle makes income taxes a poor method of taxation for states and cities who are unable or unwilling to save up reserves during economic high tides. (Think Tacoma and Washington State)

  3. tree_guy says:

    Every taxing method is unpredictable. Given the unpredictability it would behoove the legislature or other tax setting body to draw up budgets which will be significantly lower than the expected revenue. Families budget like this all the time. They may expect to take in $50,000 this for year (for example) but only budget to spend $3,000 per month. Our government should be less cautious.

  4. truthbusterguy says:

    Sales tax??? Who pays sales tax anymore. Starve the beast and learn how to aviod this tax. Look at the immigrant groups. They are smart enough to avoid this tax. If you pay it you are not that smart.

    The state is on the ropes so now go for the knock out and starve them. Learn the ways.

  5. An income tax makes a lot of sense. But before we go there, let’s put in place a constitutional amendment that requires voter approval for tax increases of sales, income, and property taxes.

  6. Misunderestimated says:

    An income tax is insane!
    A sales or consumption tax is the only known fair tax because you only pay tax if you spend money on something besides food or water.
    Food items are exempt from sales taxes.
    The rich pay much more in taxes because they tend to buy more expensive items.
    Anyone telling us how wonderful a state income tax would be simply needs to move to California…it has worked wonderfully in helping destroy their economy.

  7. sales tax is indeed the very embodiment of a regressive tax system.
    if i make $100k, then sales tax is a much smaller percentage of my income than someone making $10k/yr.
    so if happen to be wealthy enough to have disposable income that i don’t need to spend, then i am not taxed on that at the state level until i NEED to spend it.
    if i have no disposable income, then ALL of my funds are taxed on the way in (wages) and the way out (sales tax, aside from food of course).
    also, if i have no disposable income, then i am not able to take advantage of the lower tax rates on capital gains as compared to income tax (federal).

  8. bobcat1a says:

    Why does truthbusterguy hate this country so much?

  9. No State Income Tax in Washington state unless, and until a state constitutional amendment is ratified to prohibit any State Sales Tax.

    The state should ONLY be allowed to tax us via Income Tax or Sales Tax, but NEVER BOTH!!!

  10. concernedtacoma7 says:

    Fairer? And person who earns $1/year vs $1mil/year uses the same amount of state services. More likely a low earner uses more. I say give the uber-rich a tax break and charge them by the hour for emergency services. Encourage wealth to come here, end the ‘rich is evil’ attitude. OWS hires no one (this line is for you, mucky)

  11. Dave98373 says:

    ANY tax is unpredictable! If the state wasn’t so free and loose with our money maybe an income tax would get more support…but not right now.

  12. No wonder were in such financial trouble. Cheap cheap cheap!!!!!
    If you loved this country your letter would be about doing whatever it takes to make her stronger. But all you do is whine.

  13. denismenis says:

    An income tax only is crazy – revenue and trying to budget is like a roller coaster. Serving on a school board in Oregon demonstrated that to me.

    Only a sales tax is crazy as well, there’s a roller coaster, but the peaks and valleys aren’t quite as steep.

    Then there’s the property tax, where a rate is figured on value, and, as we learned in the past three years, when value is artificially inflated, there’s heck to pay when it collapses.

    If the state can bite the bullet and balance revenue with a “constitutionally locked” income tax (flat 2% or so), reduction and locked sales tax, and limit on property tax, and also be locked into LIVING within that revenue, it may be more stable and also equitable, and palatable for taxpayers as well.

  14. concernedtacoma7 “Fairer? And person who earns $1/year vs $1mil/year uses the same amount of state services. More likely a low earner uses more. I say give the uber-rich a tax break and charge them by the hour for emergency services.”

    ct7 You have AGAIN made a FAIRLY uninformed and FOOLISH statement if the ever was one.

    Consider this…

    “Consider Bill Gates. He started Microsoft as a college dropout and became the world’s richest person. Though he has undoubtedly benefited from his unusual intelligence and business acumen, he could not have created or sustained his personal wealth without the common wealth. The legal system protected Microsoft’s intellectual property and contracts. The tax-supported financial infrastructure enabled him to access capital markets and trade his stock in a market in which investors have confidence. He built his company with many employees educated in public schools and universities. Tax-funded research helped develop computer science and the internet. Trade laws negotiated and enforced by the government protect his ability to sell his products abroad. These are but a few of the ways in which Mr. Gates’ accumulation of wealth was empowered by the common wealth and by taxation.”

    And remember “Corporations are people too, my friend!” (Mitt Romney)

    “Ordinary people just drive on the highways; corporations send fleets of trucks. Ordinary people may get a bank loan for their mortgage; corporations borrow money to buy whole companies. Ordinary people rarely use the courts; most of the courts are used for corporate law and contract disputes. Corporations and their investors — those who have accumulated enough money beyond basic needs so they can invest — make much more use, compound use, of the empowering infrastructure provided by everybody’s tax money.”

    “The wealthy have made greater use of the common good—they have been empowered by it in creating their wealth—and thus they have a greater moral obligation to sustain it. They are merely paying their debt to society in arrears and investing in future empowerment.”

    So, why shouldn’t the wealthy pay at a higher tax rate? After all, they apparently DO get more government benefits than ordinary people.

  15. P.S. In fact, the wealthy take advantage of FAR MORE government benefits than ordinary folks have any access to. And that’s a FAIRLY obvious FACT! About time the rich started PAYING THEIR FAIR SHARE.

  16. BlaineCGarver says:

    The class warfare rabble-rousers always quote a percentage point, but ignore the FACT that X% of 25,000 is very much less than X% of 250,000. AND the fact that the greater buying power is creating more jobs than the piddly buying power of the lower class. The trouble with the national budget is not the rich not paying enough, but that about half the working people don’t pay any taxes at all, and the number on welfare and limitless other handouts is staggering.

  17. Blaine! Blaine! Blaine! Still pumping out that tired old lie! (No, that’s not a typo, I meant to write “lie” and not line.) Here, read this….

    ===============

    Poor Americans do pay taxes. (published April 13, 2011)

    Gretchen Carlson, the Fox News host, said last year “47 percent of Americans don’t pay any taxes.” John McCain and Sarah Palin both said similar things during the 2008 campaign about the bottom half of Americans.

    Ari Fleischer, the former Bush White House spokesman, once said “50 percent of the country gets benefits without paying for them.”

    Actually, they pay lots of taxes—just not lots of federal income taxes.

    Data from the Tax Foundation show that in 2008, the average income for the bottom half of taxpayers was $15,300.

    This year the first $9,350 of income is exempt from taxes for singles and $18,700 for married couples, just slightly more than in 2008. That means millions of the poor do not make enough to owe income taxes.

    But they still pay plenty of other taxes, including federal payroll taxes. Between gas taxes, sales taxes, utility taxes and other taxes, no one lives tax-free in America.

    When it comes to state and local taxes, the poor bear a heavier burden than the rich in every state except Vermont, the Institute on Taxation and Economic Policy calculated from official data. In Alabama, for example, the burden on the poor is more than twice that of the top 1 percent. The one-fifth of Alabama families making less than $13,000 pay almost 11 percent of their income in state and local taxes, compared with less than 4 percent for those who make $229,000 or more.

    ===============

    Blaine, you could move to Vermont!

  18. Speaking of Vermont! That reminds me of the joke Leno told about the U.S. Senate. This is not exactly what he said, but it went something like…

    The US Senate is hard at work on a bill to make it illegal to sell fake maple syrup.

    It’s good to see that the Senate has its priorities straight.

    You sell worthless stocks and bonds and bankrupt your company, you get a federal bailout.

    You sell fake Mrs. Butterworths and its 5 years in the big house.

    Leno tells it better than I can write it, so take a look at this link:

    http://www.nbc.com/the-tonight-show/video/monologue-part-1-10-25-11/1364559

    The point is, there’s another way THE RICH get far more from government than the ordinary American does. Time for the rich to start paying their fair share! The Buffett Rule RULES!!!

  19. muckibr makes 2 very good posts with I agree.One of the things I think I see in the future is a move to start taxing Food.When Politicians spout about,everything is on the table,don’t think this is not being discussed behind closed doors.I have visited States that have an income tax,sales tax and have now are taxing food.The tax start out fairly low but soon start the climb upward.So pay close attention if you hear any legislator suggesting any such Idea.Also any of his or her Cohorts that agree with him or her.You have the power in your Vote to curtail any further action from these taxaholics and should do so!

  20. ItalianSpring says:

    Tommy, who posted the first comment is exactly right.

  21. More deadbeats.

  22. Oh the ignorance! Sales tax Is a very progressive tax. My truck costs 10 times what your car cost? I pay 10 times the tax. Sales tax allows drug dealers, lying business owners, earned income credit receivers etc to be forced to pay toward the states services. With an income tax, these individuals continue to just suck the teat of public services with their section 8 housing, food stamps and other services, never putting a dime back into our system. Sales tax is far more fair, and logical than a state income tax. Especially given the fact that non-prepared food is exempt in our state. It the one intelligent thing this state has going for it!

  23. Bandito – the deadbeats are the right wing anti-tax mob who want all the privileges, comfort, and connivances of living in America but don’t want to pay for.

    If the corporate welfare and tax loopholes were ended we the workers would not have to pay so much of the tax burden.

  24. BlaineCGarver says:

    Ahem, we are not talking about corporate tax and loopholes (which should be plugged) Anyway you look at it, everyone is NOT paying a fair share: mostly welfare sponges and cheats.

  25. BlaineCGarver says:

    Wow, Xring, I missed the part in the tax code where rates are different between ‘Crats and Conservatives that have money…..I guess everyone will switch to being a conservative since we get so many privileges……LMAO @ how you spin uselessly.

  26. Wrapper98439 says:

    I cannot believe some of the garbage spewed here. Take the comment about the poor paying taxes. A friend just got 8 grand back from federal taxes. He paid in two, so he made six. If he pays five hundred a month in taxes, he would have to spend five grand. He only makes about two, so the Bill Gates’s of the state are paying his taxes. He is not. As for the state’s burden from Microsoft, even if it is five grand per employee, that is far less than the cost per employee if they were sitting at home collecting unemployment and using state benefits for medical and food.

  27. B-G-C,
    How foolish of you to fail to understand Progressives(Crats) want to raise taxes on the rich while the Cons want to lower or even eliminate all taxes on corporations and the supper rich.

  28. concerned & tmell–
    the reason sales tax is regressive is that the guy making $10k will be taxed on a larger % of their income, because they do not have DISPOSABLE income. ALL of it goes right back into the economy.
    the guy making $1mil has plenty of disposable income that it not spent on a bunch of trucks, but is invested in making more money (taxed at %15 capital gains rate). not being recirculated, but compounding in accounts and stocks. believe it or not; most people making $1mil are not entrepreneurs or business ownering self-starters.
    Also the guy making $10k doesnt have the means to avoid the sales tax like the guy making $1mil does.
    Here’s a Seattle P.I link (dated i know, but relevant)
    http://www.seattlepi.com/news/article/State-tax-system-hurts-poor-data-find-1104803.php

  29. klthompson says:

    Income tax programs are never fair because of legislative tinkering to favor special interests. Sales taxes, another name for consumption taxes, is the best way to ensure everyone pays something for the government they get whether they hate or not. There is a question as to the constitutionality of a graduated income tax in Washington but I don’t recall if it has ever been tested. Fixed income tax proposals have been defeated every time they have been on the ballot. Mostly because the non thinkers in Olympia have consistently tried to leave the sales tax in place at the same time.

  30. it has been tested…in that the states with the most tax inequity are the states with the highest sales tax. the results render your argument moot.

  31. A combination of sales tax and income tax would more equitably distribute the burden.

  32. pantomancer says:

    I might be agreeable to a sales IF there was a guarantee the sales tax would be eliminated.
    Also, all taxes reduce purchasing power.

  33. pantomancer says:

    sales tax

  34. So, pantomancer “might be agreeable to a sales [tax] IF there was a guarantee the sales tax would be eliminated.”

    Okay!

    sales [tax] – sales tax = NO TAX!

    I’d like that too, but who would pay for our government?

  35. pantomancer says:

    2 funny. :) Thanks for the correction.

    I meant to say that – I might be agreeable to an income tax IF there was a guarantee the sales tax would be eliminated.

  36. panto… I thought that’s what you really meant. If you’ll note my comment above at 1/27 @ 11:19 PM, you’ll see I agree with you. One or the other, but never both.

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