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To: kabar

“tax that takes a larger percentage from low-income people than from high-income people”

People often pretend like this is the case, but it’s not so much. Taxes are not regressive simply if poor people pay more of them than others. They are so if they fall more heavily, relative to income, on people with lower incomes. Poor people paying a larger percentage of the total revenues does not necessarily (though of course it could, just not by itself) constitute this.

It is definitely true of sin taxes that they fall more heavily on poor people relative to income. I doubt it for bridge tolls, especially considering the relationship between car ownership and income.


37 posted on 09/21/2011 8:36:51 AM PDT by Tublecane
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To: Tublecane
Investopedia explains Regressive Tax

Some examples include gas tax and cigarette tax. For example, if a person has $10 of income and must pay $1 of tax on a package of cigarettes, this represents 10% of the person's income. However, if the person has $20 of income, this $1 tax only represents 5% of that person's income.

Sales taxes that apply to essentials are generally considered to be regressive as well because expenses for food, clothing and shelter tend to make up a higher percentage of a lower income consumer's overall budget. In this case, even though the tax may be uniform (such as 7% sales tax), lower income consumers are more affected by it because they are less able to afford it.

It is definitely true of sin taxes that they fall more heavily on poor people relative to income. I doubt it for bridge tolls, especially considering the relationship between car ownership and income.

You appear to be missing the point. Forget about trying to define "poor." Rather it is about income levels and the impact that a 50% increase in a bridge or tunnel toll has on people. Lower income people are going to feel the impact far more than those with higher incomes. If you must use the bridge or tunnel to commute to work, it could have a major impact on your discretionary income.

41 posted on 09/21/2011 9:32:21 AM PDT by kabar
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