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by Arodex
27 days ago
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It is a progressive tax. It is purely neutral when considered as a sales tax (same percentage, whether you buy a cheap loaf of bread or a luxury gizmo), regressive as a share of income when you consider the poor expend more of their revenue into daily expenditures (whereas the rich put a greater proportion into savings), but back to neutral when you consider savings are meant to be used one day anyway, and slightly progressive in countries where VAT is lower for food and other vital daily expenditures. https://taxfoundation.org/blog/value-added-tax-vat-progressi... |
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Being neutral relative to a sales tax is a confusing starting point. I consider a sales tax to be a truly bad tax, as it disproportionately effects the poor.