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.
More on switching to sales taxes
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