Is a perfect sales tax actually regressive?

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@Sidewalker

In raw dollars and in any other way you measure value. 
Not true. If everything becomes 25% more expensive, the same number of raw dollars is worth 20% less.

there is investment power money too
You only buy stocks so you can eventually spend the money. The dividends will have reduced purchasing power, so it's just kicking the can down the road.

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@Savant
In raw dollars and in any other way you measure value. 
Not true. If everything becomes 25% more expensive, the same number of raw dollars is worth 20% less.
Yes, there is inflation, and no, that doesn't change the fact that a sales tax is a regressive tax.
there is investment power money too
You only buy stocks so you can eventually spend the money. The dividends will have reduced purchasing power, so it's just kicking the can down the road.
No, you buy stocks to make more money, and when you make more money then the sales tax you pay becomes an even lesser percentage of total earnings, 

It's not that difficult really, the math is straightforward.


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@Sidewalker
Yes, there is inflation, and no, that doesn't change the fact that a sales tax is a regressive tax.
A sales tax causes inflation, which impacts everyone's purchasing power by the same percent regardless of income.

No, you buy stocks to make more money, and when you make more money then the sales tax you pay becomes an even lesser percentage of total earnings,
Not really. With 20% income tax, I earn $100 and keep $80. I put it in the stock market and it doubles, giving me $160. With 25% sales tax, I earn $100, which would buy as much as $80 would without the tax. I invest the $100 in the stock market and it doubles. I now have $200, which buys as much as $160 would before the tax. Either way, someone who makes $100 would only get to buy 160 widgets after investing. With ten times as much, they'd get 10 times as many widgets, and 20% would be a ten times bigger loss.

I'm ignoring capital gains tax, but that's because that tends to work separately from income tax. A sales tax + capital gains tax would function the same as an income tax + capital gains tax.
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@Savant
Yes, there is inflation, and no, that doesn't change the fact that a sales tax is a regressive tax.
A sales tax causes inflation, which impacts everyone's purchasing power by the same percent regardless of income.
Yes, inflation, that's a percentage thing too, I get it, but that doesn't change the fact that the sales tax percentage of total income is isn't equal, and hence, sales tax is regressive.
No, you buy stocks to make more money, and when you make more money then the sales tax you pay becomes an even lesser percentage of total earnings,
Not really. With 20% income tax, I earn $100 and keep $80. I put it in the stock market and it doubles, giving me $160. With 25% sales tax, I earn $100, which would buy as much as $80 would without the tax. I invest the $100 in the stock market and it doubles. I now have $200, which buys as much as $160 would before the tax. Either way, someone who makes $100 would only get to buy 160 widgets after investing. With ten times as much, they'd get 10 times as many widgets, and 20% would be a ten times bigger loss.

I'm ignoring capital gains tax, but that's because that tends to work separately from income tax. A sales tax + capital gains tax would function the same as an income tax + capital gains tax.
The terms "sales tax", "progressive", "regressive", and "proportional" are explicitly defined economic terms, it's simple mathematics.

What's the point of just changing definitions?

Also, you never explained what you mean by "perfect" sales tax.
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@Sidewalker
sales tax percentage of total income is isn't equal, and hence, sales tax is regressive...the terms "sales tax", "progressive", "regressive", and "proportional" are explicitly defined economic terms, it's simple mathematics. What's the point of just changing definitions?
I'm not changing definitions. Regressive taxes create a larger percentage burden on lower incomes. Sales tax doesn't. Even if you define it in terms of dollars spent, the rich person will eventually spend their money (it exists to be spent, after all), or someone who inherits it will. All that changes is when the tax is paid.
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@Savant
I'm ignoring capital gains tax, but that's because that tends to work separately from income tax. A sales tax + capital gains tax would function the same as an income tax + capital gains tax.
Get an accountant to help you out.
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@Savant
sales tax percentage of total income is isn't equal, and hence, sales tax is regressive...the terms "sales tax", "progressive", "regressive", and "proportional" are explicitly defined economic terms, it's simple mathematics. What's the point of just changing definitions?
I'm not changing definitions. Regressive taxes create a larger percentage burden on lower incomes. Sales tax doesn't. 
Yes, sales tax does, it represents a larger percentage of the lower income, making it a regressive tax.
Even if you define it in terms of dollars spent, the rich person will eventually spend their money (it exists to be spent, after all), or someone who inherits it will. All that changes is when the tax is paid.
I get it, the mantra "money exists to be spent" is a principle of faith for you, but the idea that all money is spent on sales taxable consumption is an absurd fantasy, it just is not the case. 

No matter how many times you chant that principle of your faith, the concepts, definitions and mathematical formulas of modern-day economics aren't going to change.  It isn't a magical incantation that turns the world of economics upside down.
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@Savant
Yes, there is inflation, and no, that doesn't change the fact that a sales tax is a regressive tax.
A sales tax causes inflation, which impacts everyone's purchasing power by the same percent regardless of income.
Only expansion of the money supply causes inflation. We've been over this in another thread. I'll do it again, it's important.


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@ADreamOfLiberty
Only expansion of the money supply causes inflation. We've been over this in another thread. I'll do it again, it's important.
Then instead of inflation, "reduction in purchasing power"
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@Sidewalker
it represents a larger percentage of the lower income, making it a regressive tax
The burden is reduced purchasing power, and that reduction is a consistent percentage.

the idea that all money is spent on sales taxable consumption
I specified a sales tax that avoids loopholes. That would mean all consumption is sales taxable. There are loopholes for income tax, too, it's really not that different.
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@Savant
Only expansion of the money supply causes inflation. We've been over this in another thread. I'll do it again, it's important.
Then instead of inflation, "reduction in purchasing power"
Sure
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@Savant
I specified a sales tax that avoids loopholes. That would mean all consumption is sales taxable. There are loopholes for income tax, too, it's really not that different.

The federal government considers "basic groceries" to be zero-rated which means there is no GST or HST on those items. Whether or not you already know that there are no taxes on certain groceries, you might not know all of the food and drink products you don't pay tax on in Canada.
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The federal government considers "basic groceries" to be zero-rated which means there is no GST or HST on those items. Whether or not you already know that there are no taxes on certain groceries, you might not know all of the food and drink products you don't pay tax on in Canada.
Which would make the sales tax progressive, the opposite of regressive.
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@Savant
The federal government considers "basic groceries" to be zero-rated which means there is no GST or HST on those items. Whether or not you already know that there are no taxes on certain groceries, you might not know all of the food and drink products you don't pay tax on in Canada.
Which would make the sales tax progressive, the opposite of regressive.
That is if you live in Canada.
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@Savant
it represents a larger percentage of the lower income, making it a regressive tax
The burden is reduced purchasing power, and that reduction is a consistent percentage.
Yes, inflation is expressed as a percentage increase, and no, that doesn't change the fact that a sales tax is a regressive tax.
the idea that all money is spent on sales taxable consumption
I specified a sales tax that avoids loopholes. That would mean all consumption is sales taxable. There are loopholes for income tax, too, it's really not that different.
I don't like to challenge a person's religious beliefs, this belief is clearly a principle of your faith, so knock yourself out.

The economics world just doesn't understand economics.

Whatever floats your boat.
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@Sidewalker
Yes, inflation is expressed as a percentage increase, and no, that doesn't change the fact that a sales tax is a regressive tax.
I'm not following. Is a sales tax not effectively inflating the price of all goods? If the burden of permanent inflation is proportional to income, why isn't the same true for a sales tax?

The economics world just doesn't understand economics.
I don't know if I'm missing something, but I've explained why the burden of a sales tax is proportional to income. It seems to me that you haven't explained why you believe it would be regressive.

I get it, the mantra "money exists to be spent" is a principle of faith for you, but the idea that all money is spent on sales taxable consumption is an absurd fantasy
Why is this an absurd fantasy? I'm open to hearing your opinions, but I have trouble following what your logic is, beyond potential loopholes, which I've already acknowledged that a tax ought to account for.

Money that is never used is worthless, since it doesn't serve the main purpose of money: spending. If I threw paint on 50% of your money and ruined it, you would be 50% poorer. You still have the same amount of bills, but your purchasing power has been cut in half since you can only spend half as much. That's kind of what a sales tax does in raising all prices by some percentage.
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@Savant
Yes, inflation is expressed as a percentage increase, and no, that doesn't change the fact that a sales tax is a regressive tax.
I'm not following. Is a sales tax not effectively inflating the price of all goods? If the burden of permanent inflation is proportional to income, why isn't the same true for a sales tax?

The economics world just doesn't understand economics.
I don't know if I'm missing something, but I've explained why the burden of a sales tax is proportional to income. It seems to me that you haven't explained why you believe it would be regressive.

I get it, the mantra "money exists to be spent" is a principle of faith for you, but the idea that all money is spent on sales taxable consumption is an absurd fantasy
Why is this an absurd fantasy? I'm open to hearing your opinions, but I have trouble following what your logic is, beyond potential loopholes, which I've already acknowledged that a tax ought to account for.

Money that is never used is worthless, since it doesn't serve the main purpose of money: spending. If I threw paint on 50% of your money and ruined it, you would be 50% poorer. You still have the same amount of bills, but your purchasing power has been cut in half since you can only spend half as much. That's kind of what a sales tax does in raising all prices by some percentage.
"No matter how many times you chant that principle of your faith, the concepts, definitions and mathematical formulas of modern-day economics aren't going to change. "


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@Sidewalker
the concepts, definitions and mathematical formulas of modern-day economics
What concepts, definitions, and mathematical formulas supporting your position might there be?
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@Savant
the concepts, definitions and mathematical formulas of modern-day economics
What concepts, definitions, and mathematical formulas supporting your position might there be?
So, you aren’t a “science denier”, you are a science “don’t know abouter”.  At least I understand where you are coming from now.

Yes Virginia, Economics is a science. 

Believe it or not, Economics is a well-developed and very sophisticated science, complete with their own qualitative and quantitative methodologies, concepts, definitions, and mathematics.  They use mathematical tools and methods to create and analyze economic theories and models that allow economists to construct precise models, derive conclusions with mathematical logic, and test them with data.

That’s what I am referring to when I say the world of economics has “concepts, definitions, and mathematical formulas”.

They have plenty of books you can read; they even have entire schools of economics that give out degrees and everything. 

So, read a book, find somebody besides me with an economics degree, it’s even as simple as using Google, they will all tell you that a sales tax is a regressive tax, and none of them will say except for “in real dollars” and not if “all money is meant to be spent”.


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So, read a book, find somebody besides me with an economics degree, it’s even as simple as using Google, they will all tell you that a sales tax is a regressive tax, and none of them will say except for “in real dollars” and not if “all money is meant to be spent”.

Yes, sales tax is generally considered a regressive tax. This means that it affects low-income individuals disproportionately compared to high-income individuals. While everyone pays the same sales tax rate on goods and services, it represents a larger percentage of a lower-income person's budget than it does for a higher-income person.


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We need to get back to the income tax rate that Eisenhower had.
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@Sidewalker
So, read a book, find somebody besides me with an economics degree, it’s even as simple as using Google, they will all tell you that a sales tax is a regressive tax
I said that there are reasons an imperfect sales tax can be regressive, and a lot of those sources are combining income taxes with capital gains (even though it tends to function differently) or not addressing real dollars at all. Regardless, it seems like you're appealing to authority to shut down discussion and avoid addressing any of the points I'm bringing up. You should at least be able to explain why my logic doesn't work.

none of them will say except for “in real dollars” and not if “all money is meant to be spent”.
I've seen some people make the argument I'm making, but again, I'm arguing based on how purchasing power works, not based on who agrees with me.
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@Savant
it seems like you're appealing to authority to shut down discussion and avoid addressing any of the points I'm bringing up.
In other news, the sun rose today.

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@Savant
So, read a book, find somebody besides me with an economics degree, it’s even as simple as using Google, they will all tell you that a sales tax is a regressive tax
I said that there are reasons an imperfect sales tax can be regressive, and a lot of those sources are combining income taxes with capital gains (even though it tends to function differently) or not addressing real dollars at all. Regardless, it seems like you're appealing to authority to shut down discussion and avoid addressing any of the points I'm bringing up.
LOL, yes, if someone tells you to try being informed aboutthe subject matter, that  is an appeal toauthority fallacy, that’s rich.  I guessit does explain why you know nothing about the subject matter of your post, iflearning is an appeal to authority fallacy that you avoid, then no wonder youare so completely uninformed.

You should at least be able to explain why my logic doesn't work.
Let me explain yet again, it isn’t logic and it’s based on faulty assumptions. I have pointed that out multiple times, you just double down on your errors and then claim I haven’t explained why your pseudo-logic isn’t logic.

AGAIN, the formula you seem to find so mysterious, the very definition of a regressive tax is this:  Sales Tax Paid / Total Income = Tax Paid as a Percent of Total Income.   As the Total Income increases, the percentage of Sales Tax paid goes down.   And yes, even if the terms of the equation are actual dollars, the math stays the same.  And no, your nonsense doesn’t become true because your principle of faith says that all money is spent on taxable items, that is a naïve assumption based on total lack of knowledge about the subject.

none of them will say except for “in real dollars” and not if “all money is meant to be spent”.
I've seen some people make the argument I'm making, but again, I'm arguing based on how purchasing power works, not based on who agrees with me.
No, you are arguing based on lack of knowledge about thesubject matter, not even loosely based on the subject matter.

You still have not answered my question about what makes a sales tax a "perfect" sales tax, what is the difference.
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You still have not answered my question about what makes a sales tax a "perfect" sales tax, what is the difference.

Which type of tax is most efficient?
Some economists argue that taxes on consumption are always more efficient than taxes on income, because the latter have a greater disincentive effect.