County, Towns and School District Favor Regressive Taxes

From: grandcountyscoop.blogspot.com

Regressive taxes take a larger percentage of income from low-income households than higher income households as a total percentage of income. Examples of regressive taxes are sales taxes, fees and fines.

As an example, let's compare a $20,000 dollar per year household to one making $60,000 dollars per year. Let's assume the same number of people per household, and that they spend roughly the same amount of money on food and gasoline. They'll both pay the same amount of sales taxes on their purchases, but the household making $20,000 will pay a much higher percentage of taxes compared to their income than the family earning $60,000. I'm going to give an example of these two families shopping at Safeway in Fraser to show just how much sales taxes affect lower income households.

In a recent Credit Loan study, it was shown that the average household (consumer unit) spends $6372 per year on food.(Credit Loan) For the $20,000 household, that translates into nearly 32 percent of their income going just to food. For the $60,000 household, it's a little more than 10 percent.

Currently, the sales tax at the Fraser Safeway is 7.9 percent. That total consists of a 2.9 percent state, one percent county and a four percent city tax. Let's assume our two households spend nearly all of their food money at Safeway. They would pay $503 dollars in sales taxes on their $6372 yearly food outlay. For the $20,000 dollar household, that equates to 2.5 percent of their entire income going to pay taxes on the food they eat. For the $60,000 household, the total tax outlay on food is less than one percent, at .008. That means the $20,000 household spends three times as much tax as a percentage of total income on food purchases as compared to the $60,000 household, even though they spend the same amount.

There's going to be a big push to raise county sales taxes by one percent in order to fill the school district's coffers. So how does this affect our lower income families? It's only a penny right? Well, let's do the math.

A one percent sales tax increase would raise Safeway's total sales tax to 8.9 percent. That means, for the same $6372 outlay for food, our households will now pay $567 dollars in sales taxes--a nearly 13 percent increase! (64/503=0.127) The affect on our households? The $20,000 household is now going to pay 2.8 percent of their total income to food taxes--also a 12 percent increase. The $60,000 dollar household will now pay nearly a full percent of their total income to food taxes, at .095 percent--an 18 percent increase.

Now, for Superintendents making $120,000, that's nothing. But for a school district with a large percentage of its citizens making decidedly less than that, a one percent sales tax increase is a very real threat to their livelihood.