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submitted 3 days ago* (last edited 3 days ago) by UraniumBlazer@lemm.ee to c/economics@lemmy.ml

Income taxes can be made progressive. Sales taxes are almost always regressive. Businesses need to do a lot more paperwork to document these taxes.

Why don't leftist parties campaign to abolish sales taxes and replace the lost revenue with an increase in a progressive income tax?

Am I missing some critical functionality of sales taxes that income taxes cannot replicate?


Edit: Here's an important feature of sales taxes that a few commentators helped me realize. It's better if we think of a sales tax as a "revenue tax" instead. Let's say we are in a country with multiple provinces. A business sells stuff in province A. However, the business and its owners are both located in province B. If sales tax didn't exist, then all money earned by the business would go to province B's government. Province A cannot enact tariffs and stuff like that. Thus, it puts up a "revenue tax" that is taxed to business for all revenue earned, i.e., a sales tax.

For those wondering, no, a corporate tax is not a revenue tax. It's a tax on profit. Non profits for example, do not pay any corporate tax, but they do pay sales tax (which is basically, revenue tax).

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[-] millie@beehaw.org 4 points 3 days ago

Sales taxes are basically a flat tax applied based on consumption. Aside from some things being exempt from sales tax and other things being taxed extra, it basically just puts a disproportionate burden on the working class and makes it harder to make large purchases.

It certainly should be opposed by progressive politicians in the long run, in favor of a more progressive income tax system and more direct taxing of revenue. The problem with that, though, is that you'd kind of need to do both at once, or raise taxes on higher brackets first.

You'd also need more legitimately progressive politicians who aren't beholden to the interests of big business and the ultra rich.

this post was submitted on 07 Jan 2025
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