The Homa Files

In several prior posts, I demonstrated that the core of the US tax system — income taxes and payroll taxes (i.e. Social Security and Medicare) — are progressive.  That is, when all pay-ins and pay-outs are considered, high earners pay a higher proportion of their earnings in taxes.  Apparently I did overlook one very regressive tax …

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Excerpted from IBD, “Will The Poor Feel Tax Pinch From Stimulus?”, Malkinn, Jan 14, 2009

Congress is rushing this week to impose massive tax hikes of at least 61 cents on every cigarette pack sold in America, in addition to new increases on other tobacco products … a  punitive tax increases on the poor.

How so? Health surveys show that smokers are more likely to be blue-collar workers, minorities and have less than a high school education.

Tobacco taxes take a 50 times larger share of income from those earning less than $20,000 than those earning more than $200,000.

Put another way: Families making less than $30,000 per year pay more than half of all taxes paid on cigarettes, while families making more than $60,000 pay only 14%.

That’s the dictionary definition of regressive, not progressive.

Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=316826618344159 

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This entry was posted on January 16, 2009 at 7:41 am and is filed under Taxes. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.