Local Taxes Hit Low-Wage Earners the Hardest?

According to analysis by the Institute on Taxation and Economic Policy, local taxes hurt low-wage earners more than the upper class:

States and localities have regressive systems because they tend to rely more on sales and excise taxes (fees tacked onto items like gas, liquor and cigarettes), which are the same rate for rich and poor alike. Even property taxes, which account for much of local tax revenue, hit working- and middle-class families harder than the wealthy because their homes often represent their largest asset.

The federal income tax system, by contrast, primarily taxes individuals at a graduated rate, and those who earn more pay a larger share. (The federal system also uses payroll taxes to raise large sums for Social Security and Medicare, dipping into the pockets of many low- and moderate-income Americans who pay little, if any, income tax.)

So, you could see why local taxes “hit low-wage earners harder.” This is only as a percentage of income. This is not actually in terms of the amount of taxes paid. High-income taxpayers still pay more in absolute taxes. It’s just that that higher amount is not as much of a percentage of their total income.

With this kind of reasoning, imagine what people would think of the Fair Tax system if it gets passed? It would take the basic logic of local taxes and make it the general rule for federal income taxes as well. People will be calling it the Unfair Tax in no time.

Which is ridiculous. It is not fair for rich people to pay a higher percentage. It is not fair for rich people to pay more in taxes. It is fair for people to pay for the services they use, no matter how much income they make.

In other words, when the civil government tries to achieve anything other than justice, it does a terrible job. Let charity and mercy be the work of individuals, organizations, and churches. And let the civil government do what it alone can do well—protect the innocent by punishing criminals.

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