Doesn't sales tax burden the poor?

Discussion in 'Politics, Religion, Social Issues' started by nbs2, Jul 6, 2007.

  1. nbs2 macrumors 68030

    nbs2

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    #1
    One point that I often hear when there is discussion about raising sales taxes (or flattening the income tax), is that it disproportionately burdens the poor more than the wealthy. So, why on earth is Maryland considering raising the sales tax? Wouldn't it make more sense to cut spending and find more reasonable sources of revenue? I'm not one for gambling, and I think that slots lead to increased gambling and place resource burdens on the state. But, if slots were installed at the racetrack, would that not change anything? I mean, what do people think is going on at the track - a petting zoo? Instead we are doomed to hear about the evils of slots while propping up and supporting a historic, but struggling, racing industry as we plunge further into the depths of fiscal irresponsibility.

    I suppose this may be an issue that most of youaren't going to care about (since you aren't in the DC area), but the concept boggles my mind. Two years ago, the state had a $1b surplus. Now, we are facing a $1.5b deficit and receive lesser services than we did before. WTF?

    Don't even get me started on tuition - raising tuition by 5% and claiming that you want ot help people go to college? That may help those whom the state funds, but it does squat for the burgeoning student debt levels...
     
  2. dswoodley macrumors 6502a

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    #2
    Obviously a very complex start for a thread - lots of issues, not just tax policy. On the title thread..I do prefer sales tax as a way of leveling the playing field for everyone - I have never been a fan of income redistribution. But it's real easy for sales taxes to get way out of control.
     
  3. Queso macrumors G4

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    #3
    The sales tax doesn't tend to be the political headline rate that income tax does. Politicians the world over shy away from raising income taxes when their administration needs money, sometimes going to ridiculous lengths to invent new taxes to raise the needed cash.
     
  4. Swarmlord macrumors 6502a

    Swarmlord

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    #4
    Wow! You mean I'm not the only person in this forum that's not a fan of income redistribution? There's hope yet! :)
     
  5. nbs2 thread starter macrumors 68030

    nbs2

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    #5
    But after the 50% rate increase in electricity this year, I have a feeling that sales tax next year may be too much too soon. Add in the insane cost of housing, and you have a state that is going to either a) cater exclusively to the wealthy or b) going to bottom out. And by insane, I mean that the wife and I are thinking about buying a house. We found a townhouse, no yard, 1500 sqft, near the highway, not much in community amenities, pretty bad high school, that we can afford. Asking is $362 - we need them to drop or we can't afford it.
     
  6. dswoodley macrumors 6502a

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    #6
    In most fiscal matters I can be "conservative" - but I prefer to think of it as keeping what you earned by making good decisions, not reallocating it those who did the opposite.
     
  7. srf4real macrumors 68030

    srf4real

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    #7
    Florida is struggling with the same burdens... not having a state income tax is draining the coffers and property taxes are becoming more and more unreasonable. I don't see how an across the board sales tax hike would hurt anyone, as long as basic necessities such as food, budget priced clothing, and services, etc. remain tax free. I would gladly trade my property taxes which are four times that of my neighbors in the exact same model home because they've been there thirty years (SOH cap amendment, another long story)... for an across the board increase of three or four percent sales tax on non-necessary items.

    When I'm already going to spend a couple grand on a computer, what's thirty or fifty more dollars for the well-being of my community! I like to drive on roads without potholes, park my car at county and city beach parks, beautiful state parks, not to mention education, law enforcement, and other emergency services that I want to be there when they're needed. If the low income folks aren't spending hundreds and thousands on luxury items, they should be affected very little.:confused:

    Plus, in Florida with tourism as a contributing factor, a sales tax would generate far more revenue with less impact to its citizens, who are having to move and commute from Georgia where the cost of living isn't so horrible! I think that casinos do far more harm to the poor than any tax could ever accomplish... look at New Orleans (pre-Katrina) for an excellent example!
     
  8. Teh Don Ditty macrumors G4

    Teh Don Ditty

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    #8
    Call me when you're tax rate is 8.625%

    :p

    If anything gambling is supposed to take money in for the government, not bleed it out. But, that brings up the issue of gambling and all that fun stuff.
     
  9. srf4real macrumors 68030

    srf4real

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    #9
    Wow! We're still at 6.5%. Gambling is all fun and games until that welfare check goes to the casinos and the food stamps get sold for half the cash to support a gaming habit. I see more 'low income' people buying lottery tickets than anyone else - buying a lot of lottery tickets.;)

    I'm house poor. Four hurricanes in one year and an insurance industry made up of crooks who hide their profits in other inc.'s will do that to ya... add on a generous helping of republican 'tax breaks' and the only people paying taxes in Florida right now are the poor!

    [rant temporarily suspended for bed-time]:p
     
  10. Teh Don Ditty macrumors G4

    Teh Don Ditty

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    #10
    NYC and Long Island highest tax payers in all of the land! What do we have to show for it.... LI Cops getting paid more than an NYC cop? LI Cops start at $55000, NYC $25-$28000. I see something wrong with this. Major highways that have more potholes in it than a 16 year old with acne. I can't continue, it only pisses me off more.

    Anyways, you're right about the gambling. It's that whole get-rich-quick type of mentality. My father suffers from that and blows ridiculous sums of money on the lottery. The lottery/gambling is good for the government, not for the people.

    I feel for you, I really do. After those hurricanes insurance companies have stopped offering insurance down there because it isn't profitable for them. They really hate paying out.
     
  11. nbs2 thread starter macrumors 68030

    nbs2

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    #11
    Which is why, in absentia, I don't like state sponsored/sanctioned gambling. I don't have a problem with state overlooked gambling (firehouse casino nights, community bingo nights, etc.). It brings a lot of problems. What I don't understand is why, when we have a lottery and a racing industry, do we have a problem with slots at the race tracks. I don't think you are going to get a massive influx of folks that would otherwise never touch the stuff. You'll get, primarily, the folks that would have played the horsies or have crossed the state line in a cheap package trip to play the slots anyway. We aren't talking multi-million dollar casinos and new infrastructure. We're talking about builing into the existing. BAH!

    EDIT: I thought about it, and think I should clarify my position - I'd prefer to lower our spending and avoid slots and get rid of the lottery (the horse industry isn't going anywhere). But, if you are going to spend like the folks in the State House, there has to be a better way to make up $1.5b.

    As for the sales tax, yeah, we're "lucky" to have a 5%, but it doesn't help that MD gives a big bear hug to DE. Raise the sales tax, and suddenly it becomes a worthwhile investment to drive over the line to buy your goods. Add in our high income taxes (I pay 7.95% on top of what the feds take from me), and it is tough to afford the local cost of living.
     
  12. IJ Reilly macrumors P6

    IJ Reilly

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    #12
    All taxes redistribute income. Every last one of them, by definition. So please, let's not be disingenuous about this -- tax policy is about how not if income is redistributed.
     
  13. CanadaRAM macrumors G5

    CanadaRAM

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    #13
    Wussies. 13% combined Federal and Provincial taxes here.

    The key to the debate is that income taxes are progressive tax on earnings - they exempt the poorest and charge progressively more for the higher income brackets.

    Sales taxes are a flat tax on consumption. They are attractive to some schools of thought because "its the same for everyone - and the more you buy the more you pay", However, when a tax has to be paid on the necessities of life, that amount of tax proportionately hurts a low income person worse than a high income person.

    The high income person will spend more in absolute dollars on tax of course, but it is their choice to buy the $5 coffee or the $499 executive wine cooler appliance. A person does not have the choice whether or not to pay tax on the gas needed to drive to work, or on family's food and clothes.

    And there are many, many families for whom $70 a month (assumed tax example on $1000 living expenses) means the difference between breaking even or going deeper into debt.
     
  14. IJ Reilly macrumors P6

    IJ Reilly

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    #14
    In your country, maybe. In the U.S., the income tax rates have been flattened and taxes on the kinds of income enjoyed disproportionately by the wealthy lowered sufficiently, that the income tax system has become effectively regressive. Sales taxes are also regressive, in that people in lower and middle incomes spend more of their incomes on taxable goods than wealthier people.
     
  15. PlaceofDis macrumors Core

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    #15
    sales tax in chicago is 9% :eek:

    unless it went up again this year... but i don't think it did.
    most of the outlying suburbs are at 8.5-8.75 or so
     
  16. imac/cheese macrumors 6502a

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    #16
    A sales tax could be a legitimate way to eliminate a lot of the burrecratic BS that is currently written into the US tax code. But you are right that a flat sales tax would cut deeper into the pockets of the poor than the wealthy. A sales tax that excluded basic necessities such as food, housing, clothing, etc (as srf4real already stated) could eliminate many people from paying much tax at all. Those that spend their money on luxury goods would be the ones that ended up paying the most taxes.

    of course there are also a lot of issue with this system such as encouraging donating to charities (how would these remain tax deductible) and the more people saved their money the less the government would get; however, there are also a lot of issues with the current tax code.
     
  17. j26 macrumors 65832

    j26

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    #17
    Ha!! I spit on your 9% and raise it to 21%


    (in Ireland)
     
  18. Sherman Homan macrumors 6502

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    #18
    Yes, but probably not as much as Lottery tickets.
     
  19. nbs2 thread starter macrumors 68030

    nbs2

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    #19
    The kicker is that they want to raise the gas tax as well - which in many areas is a basic necessity. I've tried to figure out a way that I could take public transit to work. I figured out a route that would only take me 90 minutes. I'd say that isn't too bad, except it currently only takes me 10 minutes.

    I think the goal is to turn MD into a gigantic gated community.
     
  20. PlaceofDis macrumors Core

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    #20
    cycle. doesn't take much longer than driving, imo. and cheaper overall than gas or public trans.
     
  21. dswoodley macrumors 6502a

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    #21
    Gahhhhhhh!! I am going to scream if I hear the "disingenuous" card dropped one more time! It appears on every thread and half the time people use it wrong - obviously many people don't even realize what it means anymore. No offense IJ Reilly. Just a gripe on the pitfalls of a rapidly changing language. Sorry.
     
  22. nbs2 thread starter macrumors 68030

    nbs2

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    #22
    Bikes aren't allowed on I-95.;)
     
  23. Desertrat macrumors newbie

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    #23
    The sales tax takes a higher percentage of a poor person's disposable income than for one who's of higher income.

    Back when the Texas legislature was discussing raising the sales tax from 3% to 5%, there was a strong protest from those concerned with issues of poor and poverty about this regressive aspect. The Texas state sales tax is now some 7-5/8%, plus 1% more in cities.

    The motor fuel tax is one of the fairest of all taxes, since it's a user-pay deal. However, it's too low to keep up with modern-day costs of construction and maintenance, so general revenue funds are tapped as well.

    But, so long as the public is an insatiable maw for evermore government goodies, taxes will continue to increase.

    Changing the subject to what groups pay how much income tax:

    Percentiles Ranked by AGI
    AGI Threshold on Percentiles
    Percentage of Federal Personal Income Tax Paid

    Top 1%
    $328,049
    36.89

    Top 5%
    $137,056
    57.13

    Top 10%
    $99,112
    68.19

    Top 25%
    $60,041
    84.86

    Top 50%
    $30,122
    96.70

    Bottom 50%
    <$30,122
    3.30

    Note: AGI is Adjusted Gross Income
    Source: Internal Revenue Service

    So the top half of all taxpayers pay 96.7%; the bottom half of all taxpayers pay 3.3%

    'Rat
     
  24. IJ Reilly macrumors P6

    IJ Reilly

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    #24
    Scream away, especially since I know what the word means and I used it correctly, to mean insincere, deceptive, lacking in candor.

    When someone says that they are against "income redistribution" without admitting that all taxes redistribute income, then they are probably being disingenuous; they almost certainly know better but are arguing as though they don't.
     
  25. nbs2 thread starter macrumors 68030

    nbs2

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    #25
    Not to pull off the sales tax topic even further, I'm even more concerned about the Marylandeconomy now.

    I can't remember the exact number off the top of my head, but our AGI is somewhere between the Top 10 and 25%. Which is theoretically really well off and I suppose upper class (maybe upper-middle). I should feel lucky, which I do, but...

    We're struggling to save any money living here in the DC area and can't afford much of a townhouse in an area with good schools (which every parent wants/needs). The place we're looking at (see post #5), has an above average elementary school, but there is no way we're sticking around for middle and high schools. As for cost of living - we have no carryover credit card debt and I'm on a tiered repayment plan for my student loans, so we should be able to save much more easily. If you didn't own a home a while back, you're going to have a hard time. Add in the burden of our electricity rates jumping 50%.

    Maryland is making it hard for us, I have a hard time understanding how folks with even less get by. Incredible.
     

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