Talk:Regressive tax

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Contents 1 Poll Tax 2 Comments 3 Social security payroll tax 4 Examples of Regressive Taxes 5 Taiwan's income tax cited as regressive 6 fairness 6.1 npov 6.2 claim that supply-side economics advocates regressive taxes 7 Ahhh 8 Rearrangement on the Folsom argument 9 Social Security Tax based on Income? 10 Added "see also" 11 Where is the criticism? 12 Why are Regressive Tax and Progressive tax not combined? 13 Problem with the example 14 Clear definition

[edit] Poll Tax

“Poll tax” means something very different in British and American English. In the United States, it was a tax that you had to pay to vote.

That's not quite correct: see the poll tax article which has a good explanation. Ellsworth 21:35, 18 Dec 2004 (UTC)

How does the author define "rich"? When he says "it is suggested", who or what suggests this? Is this an article to inform or an article to persuade?

[edit] Comments

"A regressive tax is a tax which takes a larger percentage of income from people whose income is low"

Now we're talking.--Jerryseinfeld 03:00, 8 Jan 2005 (UTC)

Just curious, besides other problems I have with it, doesn't it potentially charge more real money from people with less? For instance if you have a 10% tax for people with 10,000 income and a 9% tax for people with 20,000 income, someone with 19,000 income is going to be paying 1,900 while someone with 20,000 income is going to be paying 1,800. Are there countermeasures in place in most regressive taxes?--Mr Bucket 23:04, 5 September 2006 (UTC)

[edit] Social security payroll tax

"only half of that is visible to wage-earners"

What does that mean?--Jerryseinfeld 03:01, 8 Jan 2005 (UTC)

I believe the author is saying that wage-earners see taxes taken out of their paychecks at half this rate; the employer pays the other half.--fsufezzik 20:04, August 12, 2005 (UTC)

[edit] Examples of Regressive Taxes

Why don't you just write that all flat taxes are regressive taxes? Isn't all VAT taxes regressive since the stupid poor person must pay VAT on everything he buys, while the smart rich person can save and invest for the future of our nation?--Jerryseinfeld 03:10, 8 Jan 2005 (UTC)

Well, it's not necessarily true that all flat taxes are regressive. In practice, most flat taxes that we see in real life tend to be regressive for the reasons you mention. But a flat tax on, say, caviar, could be progressive (poor people spend 0% of their income on the tax, but rich people spend some positive percentage). Any flat tax on a luxury would likely be progressive. And of course a flat income tax would be a proportional tax if there were no exemptions, deductions, tax shelters, etc. (unrealistic, but we're talking theory here) --fsufezzik 20:10, August 12, 2005 (UTC)

Actually, this isn't true. As people wiht larger incomes spend more on consumption as well as investment, VATs are actually progressive although at a declining rate. --jglassman

Might be a good idea to include the British Television licence as one of the more esoteric regressive taxes Shermozle 12:46, 12 October 2005 (UTC)

Sales tax is another example of regressive tax, in not just my opinion, since the very nature of being below the poverty line means you have to spend a much higher percentage of your income just to survive. The only reason I didn't modify it myself already is because I sense there would be a bit of a coup over it. There is far too much devisive politic based bickering in economics; is it just me or has it gotten worse in the last half decade?

This statement is incorrect. A (retail) sales tax is equivalent to a VAT: both are taxes on consumption, just collected at different points. Neither one, however, is regressive provided that they are uniformly applied. Consumption taxes are time-neutral, and so the amount taxed (or, more precisely, the present value of the amount taxed) is the same whether it is saved today and consumed tomorrow or whether it is consumed today; thus, the poor individual who has low savings and the wealthy individual who has high savings both end up paying taxes on their entire lifetime incomes. See Value-Added Taxation: A Tax Whose Time Has Come?, by Gilbert E. Metcalf, The Journal of Economic Perspectives (1995). In practice, many US state retail sales taxes are not uniformly applied; for example, they tax goods and services at a different rate. When the tax is not uniform, the it may end up being regressive or progressive depending on buying habits. Danculley 19:51, 3 December 2006 (UTC)

[edit] Taiwan's income tax cited as regressive

Can there be more evidence provided?

" Individual Income Tax

A progressive individual income tax from 6% to 40% exists. Non-resident foreigners who stay in Taiwan for over 90 days must file tax returns. Foreign individuals resident in Taiwan for over 183 days are subject to taxation on all income from Taiwan sources but are not liable for taxes on income earned outside of Taiwan.

Personal exemptions of NT$72,000 are allowed for the taxpayer, spouse and all dependents. For parents or lineal ascendant of the taxpayer who is over 70 years, an additional exemption of NT$108,000 can be taken."

http://www.prctaxman.com.cn/taiwan.htm

[edit] fairness

It should mention most important argument for regressive tax, that it is most fair when everyone pays same amount of tax - everyone gets same amount of protection from government.

It can also be argued that a regressive tax can be fair in the respect that those on higher incomes are still paying more income tax than those on lower incomes, yet receive nothing more (and indeed, usually less for at, as Government spending often helps poorer individuals more). I.e. a person paying $100,000 in tax from $1,000,000 in income gets nothing more (generally) in services than someone paying $10,000 from $50,000. -Nichlemn 08:19, 9 December 2005 (UTC)

I think that it is a fundamental misunderstanding of society to say that the rich benefit the least from government while the poor benefit the most. In fact the rich may receive fewer welfare checks but they receive the bulk of the police protection, the benefit of sedated masses, access to government, goods and services, and so on. Most theories of society will recognize that if society were to dissolve it is the rich, not the poor, who would lose most, precisely because society benefits them the most. That concept, I think, underscores the principle behind a progressive tax. Obviously any attempt to perfectly correlate tax rate with fairness or duty is going to be impossible. The idea, however, is that it is quite fair for the rich to pay more taxes because the rich benefit the most from society. [MKS]

This contradicts data that I have seen. For example, most of the U.S. budget is social programs, which are primarily a distribution of wealth from the rich to the poor - Medicade, Medicare, Social Security. Many social programs are dependent on income with lower levels recieving larger benifits. Lower income are more likely to use public education while higher income more likely to go for private school. Do you have any sources for your claim? Morphh ^(talk) 11:56, 12 July 2007 (UTC)

[edit] npov

It is natural to expect that some of those individuals and organizations which benefit most directly(...)

I don't think it is npov. Can i write in progressive tax:

It is natural to expect that some of those individuals and organizations which benefit most directly and most tangibly from a progressive tax (namely poor individuals), will advocate such a tax regardless of the notion of equalness. Therefore it is suggested by detractors that progressive taxes are the darlings of the poor and of special interest groups. There are indeed numerous lobbies and political groups devoted to progressive taxes.

?

Agreed. It is somewhat hypocritical to claim that regressive taxes are "greedy", given than progressive taxes may be equally greedy, just by different people. -Nichlemn 08:16, 9 December 2005 (UTC)

The cornerstone of the "rationally" self interested economics community is that the poor are not actually disadvantaged or poor but are only labeled that way because they don't have as much money as everyone else, rather than they don't have enough money to cover the most basic costs of living. To call progressive taxes, a desire to remove regressive taxes or luxury taxes an expression of equitable greed, in regard to progressive taxes, is to employ a perspective with a very skewed definition of the word. A poor man struggles to put food on the table, while a wealthy man struggles to keep higher margins of expense versus income.

Buying a ferrari is not equatable to buying food or buying a tank a gas for a 1985 toyota tercel.

An intellectually honest economist knows the difference between greed and necessity by nature of understanding the simple concept of diminishing returns in regard to the relative value of money between those with money and those without money. [CWK]

[edit] claim that supply-side economics advocates regressive taxes

From Peter Johnson (00:28, 13 November 2005 (UTC)):

• The claim that supply-side economics advocates regressive taxes is not substantiated in the article, no references are provided, and according to my readings (such as of the late supply-side writer Jude Wanniski), supply-siders only ever advocated making marginal tax rates less progressive, rather than fighting for actually regressive tax brackets.

I'm not sure the advocacy section is fixable. I think it needs to be removed entirely unless someone can come up with at least one sourced instance of a proponent of supply-side economics advocating a regressive tax structure. Under Reagan, for example, the tax structure was not made regressive. It was made less progressive -- a crucial distinction. --Bziobnic 16:18, 15 November 2005 (UTC)

I agree with the two comments above - it's too contentious a claim to make without any supporting evidence. --Aviso 21:18, 27 January 2006 (UTC)

[edit] Ahhh

I just spend over an hour working on this article too lose all the dang changes... Ahhhh! I knew I should have saved in steps. Morphh ^(talk) 04:49, 8 December 2006 (UTC)

Well, I got a little bit done... Sorry to vent on the talk. :-) Getting some sleep. Zzzz Morphh ^(talk) 05:07, 8 December 2006 (UTC)

Ok - finished cleaning up the article, added some NPOV balance, and I removed the tag. We are now in need of some serious reference work to bring this article up to par. I added a citation needed tag to the talk page to focus attention on correcting this aspect. Morphh ^(talk) 23:02, 9 December 2006 (UTC)

[edit] Rearrangement on the Folsom argument

Dear editors: I have clarified the article to show that the critique by Dr. Burton Folsom about regressive taxation is indeed his own critique. I know of no other scholar who has ever made the argument that the 1894 income tax statute was declared unconstitutional in Pollock on the ground that the tax was progressive. The tax certainly may have been progressive -- but the decision (or rather, the decisions) in Pollock had absolutely nothing to do with that, as far as I can tell. Not only that, I believe the topic of progressivity is not even mentioned by the Court in the two Pollock decisions.

I therefore modified the article to show that the statement is actually a quote of Dr. Folsom, and I added clarifying language to the effect that the "progressivity" issue was not even mentioned by the Court. Yours, Famspear 19:25, 8 March 2007 (UTC)

[edit] Social Security Tax based on Income?

In the Advocacy section the article states that Social Security tax is tied to income when discussing the overall tax burden on individuals in the highest tax bracket. Social Security tax is capped after the earner reaches a certain level (For 2007 its $97,600, I think) that is well below the level at which the highest tax bracket kicks it. This section is misleading or wrong depending on your reading of it. —The preceding unsigned comment was added by 84.11.113.36 (talk) 09:15, 26 April 2007 (UTC).

I've tried to address this by reordering and rewording some things. Morphh ^(talk) 14:48, 26 April 2007 (UTC)

The statement does not say that it applies to all income of the highest tax bracket. The tax bracket is used as a reference on how much someone could pay in income taxes and then goes on to state other taxes. 35% Fed, ?% state, 15% FICA (employee and employeer)... Morphh ^(talk) 17:33, 26 April 2007 (UTC)

For 2007, the Social Security wage base appears to be $97,500 (not $97,600). Anyway, I have updated the article on this. Yours, Famspear 17:48, 26 April 2007 (UTC)

[edit] Added "see also"

The amount of progressivity and regressivity of a tax can be expressed by different metrics. One of them in widespread use is the Suits index. I've added the suits index to the "see also" section. Minnesota appears to make regular reports of the suits index for their tax system. Interested parties are invited to expand this new article.--Perkinsms 13:02, 18 May 2007 (UTC)

[edit] Where is the criticism?

All I can get out of this article is constant advocacy for regressive taxes or at least a slam on progressive ones. Where is the argument against regressive taxes and for progressive ones? Saying that progressive taxes "aren't what our founders wanted" is blatant propaganda for the point, considering there is an amendment on the subject. What our founders wanted, ostensibly, was democracy. That's what the amendment represents. To suggest that the results of this process ran afoul of the founders' desires is both meaningless and misleading.

Perhaps someone can add to this article some comments on social justice, arguments for progressive taxation based on social contract theory, or something similar.

Also of note: Regressive is the opposite of progressive taxation but there's also taxation that is neither progressive nor regressive. Why do most of the arguements look like they are anti-progressive tax arguements rather than pro-regressive tax arguements? ASG82 (talk) 20:31, 2 April 2008 (UTC)

[edit] Why are Regressive Tax and Progressive tax not combined?

I don't get why Regressive tax and Progressive tax get separate pages.

Unless there is one page, which begins with definitions and metrics, both pages our not NPOV, IMHO.

There is also a paucity of citations. 70.22.67.251 (talk) 22:21, 12 February 2008 (UTC)

I guess it was thought that both have enough content on their own to justify it. A suggestion could be made to combine regressive, progressive, and proportional into one article. As far as NPOV, such content should be able to balance regardless of the article separation. We're likely to get into duplication of arguments though. We discussed it here at one point. I don't think I would object to a merge but I'd have to reread the articles and think about how they should be expanded. Morphh ^(talk) 14:14, 14 February 2008 (UTC)

[edit] Problem with the example

There is a problem with the Jane/John Doe example in the introduction. Although it talks about income throughout, the example doesn't actually specify either John or Jane's income. Instead it specifies their wealth. While it may be that the Jane with her higher wealth also has a higher income, we have no way of knowing from the description. It might just as likely be that John has a high income but spends it all whereas Jane has a low income but saves as much as possible. Thus Jane's relatively high wealth. In light of this it becomes apparent that the percentages quoted have just been plucked out of the air. -- Derek Ross | Talk 05:34, 14 February 2008 (UTC)

Excellent point. We'll have to look at correcting this. I see you made some changes and then reverted yourself. Feel free to correct the example and expand upon it with a wealth situation, particularly since income is surprisingly poorly correlated with expenditure. Annual income is not an especially accurate measure of one's ability to pay. Morphh ^(talk) 14:05, 14 February 2008 (UTC)

[edit] Clear definition

Here is the first line of this article. It seems poorly worded and confusing.

A regressive tax is a tax imposed so that the effective tax rate decreases as the amount to which the rate is applied increases. —Preceding unsigned comment added by 67.42.220.203 (talk) 21:12, 21 February 2008 (UTC)

We're working on a new definition, which is currently presented in the progressive tax article. I was waiting for any comments before applying it to this article. We're also considering a merger of the three articles, which would correct this as well. Morphh ^(talk) 21:30, 21 February 2008 (UTC)