muon2
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« on: March 31, 2014, 07:01:52 AM » |
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If an objective of tax policy is to tax based on the ability to pay, then sales (consumption) taxes should be preferred to income taxes. Purchases are the best indicator of the ability to pay; consider a household with children in college that add an extra job and thus pay a higher income tax rate, yet actually have lower disposable income since that education cost is largely undeductible. By adjusting rates on different categories of goods and services to discount the tax on essential purchases one can remove the primary source of regressivity in the sales tax.
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