Letter to the Oregonian

Dear Editor,

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.

Sincerely yours,

Michael Meo

secretary, Cascadia Chapter of the Pacific Green Party

3003 N.E. Weidler Street, Portland 97232

About M. Meo

Worked as translator, museum technician, truck lumper, lecture demonstrator, teacher (of English as a Second Language, science, math). Married for 25 years, 2 boys aged 18 & 16 (both on the Grant cross-country team). A couple of scholarly publications in the history of science. Two years in federal penitentiary, 1970/71, for refusing the draft.
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One Response to Letter to the Oregonian

  1. As a CPA, I can tell you unequivocally that a sales tax is regressive. This is a simple fact well known to accountants and economists.

    I wish Americans would do a better job of differentiating facts from opinions.

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