Michael Jacobs of Tigard engages in a spot of “class warfare” in his letter this morning, in which he states, “Sales taxes are not regressive.”
Poor people spend more of their disposable income than rich people do. Georgetown University has a study by economists Mark Huggett and Gustavo Ventura, entitled “Understanding Why High Income Households Save More than Low Income Households, available here. As far back as the 1920s, U.S. savings rates increase with increasing income, from negative (more expenses than income) to above 20% savings at the upper levels [five times the average income]. Writing in the Journal of Political Economy of 2004, Jonathan Skinner and Stephen Zeldes of the National Bureau of Economic Research and Karen Dynan of the Federal Reserve Board state:
In sum, our results suggest strongly that the rich do save more; more broadly, we find that saving rates increase across the entire income distribution. In addition, we present evidence suggesting that the marginal propensity to save is greater for higher-income households than for lower-income house-holds.
Taxed with a sales tax, the rich person, spending less of his income than the poor one, has less of a tax burden, just as Joseph Levy said,
The person with less money paid a higher amount of his income to taxes, which is regressive. That’s the extremely logical reason why Oregon does not impose a sales tax.
When Michael Jacobs interprets “amount of his income” to mean dollar amount rather than proportion of his income, I believe he distorts the argument to favor the wealthy.
secretary, Cascadia Chapter of the Pacific Green Party
3003 N.E. Weidler Street, Portland 97232