Peace and Freedom Party

California's Feminist Socialist Political Party

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What is regressive taxation?

by Marsha Feinland

Regressive taxes are those which hurt poor people more than they do the rich. Flat taxes, which charge the same percent, are the most regressive.

Income tax in the United States is "graduated." People who earn less money pay a lower percentage on that amount. As you earn more, you pay a higher percent on the greater amounts of income. The recent tax cuts reduced the percentage of taxes on higher incomes, making the tax flatter.

The social security tax is like a flat income tax, only worse. Everyone pays the same percent tax on the first $90,000 they make. After $90,000, the tax stops. Some people want to continue the tax on income over $90,000 to help fund social security. That is "raising the ceiling."

The most regressive thing about taxes is that they almost always get money people work hard to earn, but usually miss the wealth people and corporations get just for already being rich.

We all pay sales tax on shoes and clothes, but people with extra money do not pay sales taxes on stocks and bonds. They only pay taxes on the money they make when they sell the stocks. That is the "capital gains" tax. It's lower than the tax on the money that you work to earn, and has been going still lower since the Clinton administration.

Taxes on the profits corporations make have gone down enormously. Meanwhile, we work harder and produce more, so profits are going up. It makes sense to tax those profits to support the older workers who created them.
 
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