More on switching to sales taxes
Sun January 17, 2010 4:15 pm

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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