Why do progressives love regressive taxes?

The news that, as of July 1, several cities in very liberal Alameda County have increased their sales tax rate to a staggering 10.75%, got us thinking about how many of California’s recent tax hikes have been regressive. In fact, despite the claim that progressives like to “tax the rich,” many of the big tax hikes seen in the state — both at the state and local level — fall disproportionately on the working poor and lower middle class.

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

Sales taxes are particularly regressive.

Matthew Gardner, executive director of the left-leaning Institute of Tax and Economic Policy agrees that sales tax hurts the poor most, noting that they end up taking a bigger chunk of change from people that have smaller sums of money and slower income growth.

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

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