Certain sales taxes make economic sense and can even be socially justified. Sales tax on luxury and high-end items, for instance, can plug into the economic wellsprings of technological innovation and those wealthy enough to afford to ride the wave. Agriculture and foreign trade also can lead to some reasonable sales taxes.
But any sales tax is inherently regressive, and most of the time that leads to a socially unjust tax. Here is the very simple example: You have earned $10 this week, and your neighbor Peter Jackson has earned $1 billion. You both go to watch a movie at the local cinema. A movie ticket costs $7, plus a $2 sales tax. The movie is great--something about a jewelry heist--but when you come back home, you're left with just $1 in your pocket, while Peter Jackson has $999,999,991. (It's why he used to be so heavy.) To consume this product, you spent 90 percent of your income, while PJ has spent a few ten-millionths of a percent of his. The practical result is that it cost you a lot more of your relative income to watch the movie. Hence the word "regressive."
Well, so what? Who cares? Peter Jackson worked hard, made a fortune, and can afford to go to the movies now. You worked hard, didn't make a fortune, and so can't go to the movies. Tough for you.
Many economic conservatives will make that very argument, but they do so by implicitly rejecting the premise that all people are entitled to a certain minimum quality of life. It is one of the fundamental differences between economic liberalism and economic conservatism. We can argue with some leeway as to whether going to the cinema should qualify as a "quality of life" entitlement, but there are more than enough products in the human lifestyle for which there is no argument. These are products so important to any person's quality of life, that to charge a sales tax on them would hurt people, plain and simple. And the poorer they are, the more they would be hurt by those sales taxes.
Not surprisingly, the upper classes tend to prefer the concept of sales taxation. They have relatively much money, and therefore would pay a lower share of the tax burden, given a system based on sales taxes.
The two major alternatives are to tax income, and to tax trade. Today is Tax Day (actually Tuesday is Tax Day this year), and what that refers to is the federal income tax.
Income taxes are progressive--the opposite of regressive--because the more you earn, the more your pay in taxes. People who earn little are taxed little. People who earn much are taxed much, although, as noted, many of them can afford to pay lawyers to reduce their taxes illegitimately, using loopholes in the tax code.
(Trade-based taxes are a little too chewy to talk about in this context, and they can't generate as many revenues as the other two in any case, so I won't worry about them here.)
On the face of the issue, it would probably make sense to most people that income taxes are usually superior to sales taxes. So ends Economics 101, and then comes Economics 102, where the economic conservatives point out that taxing income deflates the economy because people who pay taxes on their income have less money to spend, whereas sales taxes help the economy because people have more money to spend (having not been taxed on their income). Then the liberals retort, but they're paying more when they buy things, so their overall wealth is not much enhanced. Then the conservatives break out pie charts, Steve Forbes lights a fart, somebody stages a boycott on Wal-Mart, and life goes on.
But at the end of the day, one thing remains: With a sales tax, poor people get hurt. With an income tax, nobody does. (Unless you count not being able to buy that second yacht as "hurt.")
That's why I support income taxes over sales taxes as a general rule.
