🚀 go-pugleaf

Maureen Eagle (maureen@mathcs.emory.edu) wrote:
: 1.  Exemption for food/housing means that a very POOR family using
: few consumer goods (buying clothes at thrift shops for $3, buying
: food and housing with their money, and using wits and imagination
: for entertainment instead of Nintendos and movies) would pay much
: less than 15% of their income.  Ditto for the frugal saving for
: their primary residence (which would also be exempt from taxation).

    It seems to me that there is a flaw in this argument.  A consumption
tax is regressive for the following reason.  If your income was near
the poverty line you will probably need to spend most of it to simply
service, hence your tax rate will be near 15%.  If your income is very
high, you will certainly spend much more money than a very poor person,
but you will also be able to save and invest a much higher percentage of
your income.  This would place mean your tax rate would be much less than
15%.  In other words, the poorer you are the more you will pay in tax as
a percentage of income.

    Take the following examples:

	Income:		$10,000
	Expenses:	$ 8,000
	Tax:		$ 1,425
	Real Tax Rate:   14.25%

	Income:		$100,000
	Expenses:	$ 70,000
	Tax:		$ 10,500
	Real Tax Rate:	 10.50%

    Jeff

-- 
==============================================================================
    Jeff Collins			Email: collins@paros.com
    Director				Phone: (404) 874-5122
    Onyx Technologies			FAX:   (404) 874-8171