#sales tax

Sales taxes are commonly seen as regressive, since the poor spend a larger portion of their income in the short term. However, a long-term sales tax doesn't tax value from consumers at the point of sale, it taxes value proportionately as soon as it is implemented. If I have an income or capital gains worth $1,000 and the price of everything goes up 25%, then the value of my income and capital gains is reduced by 20%. That's because the value of income is determined by purchasing power.

Let's say a rich person has $1,000 and a poor person as $100. Sales tax is 25% on top of a normal widget price of $1 a widget. Each of them buys 100 widgets. The poor person now has 80 widgets. The rich person now has 80 widgets plus $900, which can buy 720 widgets. Hence, the total value of the rich person's money is still reduced by 20% (from the value of 1000 widgets to the value of 800 widgets).

The main disadvantage of this tax is that if the government gets the money from the rich person earlier, they can invest it in roads and such. Although if the rich person invests their money in the stock market, the government would profit from that investment by getting more in taxes later when a larger amount of money is spent. Also, a proportional tax, even a perfect one, still isn't regressive.