![]() ![]() The poor also generally don't save while the rich do and saving is not subject to VAT. For the poor spend a larger portion of their income on food than the rich do, meaning that the VAT on food takes up a larger portion of poor incomes than high ones. ![]() Sweden's VAT does apply to food and is thus more regressive. The UK's VAT isn't very regressive as food and certain other essentials don't pay it. It depends upon what goods don't have to pay it. ![]() ![]() So, a sales tax is a regressive tax: well, it usually is. And if the opposite, lower incomes paying higher portions to a specific tax than higher ones, then that's a regressive tax. If the portion of income going in tax rises as income rises, then that's a progressive tax. The actual definition revolves around the portion of income that goes in taxation as income itself changes. Nor does progressive mean joyous nor wonderful. Regressive does not mean "totally unfair" as the editor amusingly believes. This is because of the definition of regressive and progressive we're using in economics. And the moment that we introduce a tax free allowance into the scheme (which pretty much everyone does) it becomes a progressive tax. In fact, even at its worst a flat tax would not be a regressive tax: it would be neither regressive nor progressive in fact. As someone commenting upon the economics of tax schemes should know. None of any of that describes a regressive tax. But to suggest that someone making five figures should pay at the same rate as someone making eleven is absurd. Most of the candidates plugging the flat tax offer some sort of exemption for the very poor - someone with just $10 would probably be able to keep all of it under their plans. ![]()
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