More on switching to sales taxes

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Here are some more recent figures on who pays the sales tax and why it is regressive: FINAL DISTRIBUTION OF TAX— BY HOUSEHOLD INCOME DECILE, FISCAL 2006 (dollar amounts in millions) By income deciles (each decile = 1/10 of Texas households, by ascending income range): (1) = Percent of total sales tax revenue paid by households in this decile (2) = Percent of income allocated to sales taxes by households in this decile Decile 1: less than $12,820 (1) 3.4% (2) 10.0% Decile 2: $12,820 to $21,797 (1) 4.2% (2) 3.6% Decile 3: $21,797 to $30,397 (1) 4.9% (2) 3.7% Decile 4: $30,397 to $39,743 (1) 5.4% (2) 3.0% Decile 5: $39,743 to $49,661 1,073.6 6.5 2.9% (1) 6.5% (2) 2.9% Decile 6: $49,661 to $61,734 (1) 7.6% (2) 2.7% Decile 7: $61,734 to $76,037 (1) 8.8% (2) 2.5% Decile 8: $76,037 to $96,693 (1) 10.5% (2) 2.4% Decile 9: $96,693 to $135,599 (1) 12.0% (2) 2.1% Decile 10: $135,599 and over (1) 18.9% (2) 1.6% You can plainly see that as income goes up, the percentage of sales tax payments contributed by members of a decile goes up, but sales taxes as a percentage of total income declines. The latter feature–that the poorer you are, the greater percentage of the tax burden you pay–is what makes the sales tax regressive.

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