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).

  • fitgse
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    3 days ago

    Yes but not as a percentage of their income. A wealthy person with 100000x your income does not buy 100000x times as much stuff as you.

    This is the problem with a flat tax. If we had a flat 20% tax on income for someone who makes 50k a year, that is 10k and leaves them with only 40k. For someone who makes 5M a year that is 1M but still leaves them with 4M.

    Losing that 10k when you only had 50k to start with matters a lot. Losing that 1M isn’t a big deal when you still have 4M left!