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View Diary: Report: Republican tax shifters wrong about states with no income taxes performing better (64 comments)

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  •  I live in one of those sales tax states (7+ / 0-)

    It doesn't have to be a terribly regressive tax and I can think of another tax that is FAR more regressive. How a sales tax really works out is going to depend on what is excluded and what other taxes are used to fill in around the edges.

    The Washington state sales tax excludes food and housing. Those are a huge part of the cost of living when I earned only $13,100 one year.

    When I break down my taxes that year:

    1. WA state sales tax effective rate of about 3.3%

    2. Social Security and Medicare tax rate 7.5%

    3. Federal income tax rate 0.9%

    The big problem with a sales tax is what happens when a recession hits. Income tax revenue declines based on the reduction in paid wages. A sales tax drops in response to a decline in sales. So it declines based on lost wages and due to spending cuts by those in fear of loosing their jobs.

    A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward. Franklin D. Roosevelt

    by notrouble on Fri Mar 01, 2013 at 09:31:02 AM PST

    •  In spite of those exclusions--which certainly help (1+ / 0-)
      Recommended by:
      OhioNatureMom

      ...poor people--the sales tax is still likely to be regressive.  This is, in general, because there are often offsets, caps and loopholes which permit high earners to escape more of the effects.

      "Ridicule is the only weapon which can be used against unintelligible propositions." - Thomas Jefferson

      by rfall on Fri Mar 01, 2013 at 10:41:53 AM PST

      [ Parent ]

    •  You are leaving out the B&O tax (2+ / 0-)
      Recommended by:
      myboo, grover

      which is hidden from your view because it is paid by business, the B&O tax. It's a stupid and regressive tax. The worst part is B&O taxes are based on gross revenue not revenue minus expenses. Washington State always comes in at the higher end of the top taxed states but the population does their math like you do and thinks they are doing better then states with an income tax.

      Our tax structure would be more stable, meaning fewer boom and bust cycles, and more progressive if we had an income tax.

      •  In turn we have no business income taxes (0+ / 0-)

        I understand the B&O tax can be a bit unfair, businesses get hit with it even if they are not profitable.

        Washington receives a favorable business tax rating from the Small Business & Entrepreneurship Council, classifying it as one of the 15 best states.

        A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward. Franklin D. Roosevelt

        by notrouble on Fri Mar 01, 2013 at 05:05:05 PM PST

        [ Parent ]

        •  Yes this is a good state (1+ / 0-)
          Recommended by:
          myboo

          for business but it is one of the worst in unfair tax systems.

          The greatest tax burden is carried by the poorest people. Because the B&O tax is hidden, even you don't include it in the taxes you pay but you still pay it, we need an income tax.

          •  Can't you say the same thing about (0+ / 0-)

            Business income taxes? In fact, you can pretty much say that about any business tax. I don't mean that we should eliminate business taxes, they have their place. We just need to understand that they become a part of the price of the goods or services they provide.

            Because the B&O tax is hidden, even you don't include it in the taxes you pay but you still pay it,

            A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward. Franklin D. Roosevelt

            by notrouble on Fri Mar 01, 2013 at 05:39:36 PM PST

            [ Parent ]

    •  Other taxes, too... (1+ / 0-)
      Recommended by:
      grover

      WA also has among the nation's highest taxes on liquor, gasoline, and cigarettes.  
      Those tend to be regressive, as well, though other policy issues also enter into those decisions.

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