Progressives push back regressive taxes in California – Whittier Daily News


Why do progressives like regressive taxes?

The news that on July 1, several towns in the very liberal Alameda County increased their sales tax rates to 10.75%, got us thinking about how many recent tax hikes in California have been regressive. . In fact, despite the claim that progressives like to “tax the rich,” many of the large tax hikes seen in the state – both state and local levels – disproportionately affect the working poor and the lower middle class.

Here it is important to define the terms. According to the Tax Foundation, a regressive tax is a tax where the average tax burden decreases as income increases. Low-income taxpayers pay a disproportionately high share of their income in taxes, while middle- and high-income taxpayers pay a relatively low share. A progressive tax, on the other hand, is a tax where the average tax burden increases with income. High-income families pay a disproportionate share of the tax burden, while low- and middle-income taxpayers bear a relatively low tax burden.

Sales taxes are particularly regressive.

Matthew Gardner, executive director of the Left Institute for Fiscal and Economic Policy, agrees that the sales tax hurts the poor the most, noting that they end up taking more of the change from people with smaller sums money and slower income growth.

A major factor in this is that a higher percentage of the spending of the poor is spent on taxable consumer goods.

So here’s a question for progressives: If sales taxes disproportionately harm the poor and the working class, why does California have the highest state sales tax rate in America? The base rate of 7.25% is bad enough, but when all the local add-ons are included, it’s not just the cities in the Bay Area that are well above 10%. Too bad for looking for the little guy.

Another example of a very regressive tax is the gasoline tax. Not only are most excise taxes regressive, but the gasoline tax is particularly regressive as the poor and middle classes are less likely to drive fuel-efficient cars – and certainly not Tesla. Moreover, it is not the rich who rely on pickup trucks and make long trips to work sites, it is more the people who work in the construction trades.

Adding insult to injury, California has an even more nefarious feature of the gasoline tax. Because state sales tax is imposed on the total cost of a gallon of gasoline which includes gasoline tax, we not only have a double California gasoline tax, we have a tax. regressive imposed on another regressive tax.

The third example of a regressive tax is a creature called a “parcel tax,” a tax added on top of the ad valorem (value-based) property tax that homeowners already pay. Parcel taxes are generally flat taxes imposed on goods, regardless of their value. As a result, the retired couple living on a fixed income in a modest bungalow pay the same amount as the owner of a multi-million dollar mansion in Beverly Hills. In short, plot taxes represent one of the most regressive forms of taxation imaginable.

Going back to the question posed at the top of the page as to why progressives like regressive taxes, the answer is that regressive taxes are more general and more stable than, say, income taxes.

To be sure, California’s income tax is progressive, taxing the very rich at the highest rate in the country – 13.3% – but as these wealthy taxpayers engage in tax evasion strategies – like leaving the ‘State – our progressive political class will increasingly feast on the working poor and the middle class with even higher regressive taxes. That is, until they move too.

Jon Coupal is President of the Howard Jarvis Taxpayers Association.

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