If everyone pays the same tax rate, why is a sales tax unfair? Pennsylvania's 6 percent sales tax is unfair because it is not based on a person's ability to pay (income), it punishes the poor and rewards the rich.
For example, Pennsylvania taxes the sales price of a motor vehicle, new or used. On a vehicle that sells for $20,000, a buyer pays an additional $1,200 sales tax. That $1,200 punishes someone with a $20,000 income more than someone with a $40,000 income, and it rewards someone with a $200,000 income, who could easily pay a lot more.
Likewise, Pennsylvania's 3.07 percent personal income tax rate is an unfair tax, and so are occupation, per capita and property taxes because they aren't based on a person's ability to pay. A graduated personal income tax that rises as one's income increases is fairer because it taxes those who can afford to pay more in taxes.
The federal income tax system is graduated, and a single person with a taxable income of $20,000 pays almost $2,600 (13 percent) in taxes, but a single person with a taxable income of $40,000 pays almost $6,200 (15.5 percent) in taxes and a single person with a taxable income of $200,000 pays $50,000 (25 percent) in taxes. As you can see, a graduated income tax levels the playing field by taxing those who can afford to pay more a higher rate.
Believe it or not, during the 1950s the top federal marginal income tax rate was 91 percent and Republican President Eisenhower had balanced budgets, supported New Deal programs like Social Security, cut national defense by keeping America out of wars and started the interstate highway system during a decade when Republicans were still broad-based conservatives, unlike today's right-wing radicals.
Sales and flat-rate personal income taxes are unfair to those who are not wealthy, but the most regressive tax of all is the payroll tax for Social Security that has a cap on wages on $113,700, which means the wealthy don't pay on income above that amount, and the federal estate tax doesn't kick in until the value of an estate reaches at least $5 million. How many Americans have that kind of money? Very few!
Unfortunately, the sales tax is just one of too many unfair taxes that punish the poor and reward the rich. A graduated income tax is much fairer because it taxes those who can afford to pay more, not less. They don't need tax cuts, and it won't create jobs.
David L. Faust,