[PEN-L:6774] Re: Marginal Tax Rates

[MScoleman@xxxxxxx]

Just to add a couple of points to Max's about the regressivity of the tax
code:

sales tax is a flat tax, and the poor pay more than the wealthy in two ways
on sales tax:

1.  the poor consume all of their income, and, up to relatively high levels
of income, 'dissave' (using a keynesian term) at a much higher rate than the
well-to-do.  In actuality, this is three effects: (a) the poor pay a much
higher percentage of their income in sales tax.  (b) they consume all of
their income, as opposed to the more well-to-do who save a percentage of
their income.  hence, they pay sales tax with all their income as opposed to
the wealthy who pay sales tax with only a part of their income.  (c) until
incomes get over the $70-80,000 range, almost all families carry constant
credit card balances.  The rich pay less for goods simply by paying off their
cards or paying cash.

2.  the wealthy have more options.  they can afford to shop in states where
there is less sales tax.  For example, not to long ago Tiffany's was
investigated for sending jewelry over state lines to New Jersey from New York
to avoid high sales taxes in New York.  How many poor and working people that
you know of shop at Tiffany's?

maggie coleman mscoleman@xxxxxxx