Sales Tax
Categories: Tax
Thumb tacks. Horse tacks. Sales tax.
Sales tax is yet another way the government collects money to spend on things they need to, uh...govern us. So if you buy an Acme Chihuahua Launcher in California, you pay 8% tax on it. Meaning that you thought you were only spending $100, and it turns out, that that the launcher really cost you $108.
Each state has different sales tax charges. Some are high; some are low. Sales tax is considered regressive, which sounds like a bad word, and it kind of is intended to be. Why? Because everyone pays the same rate, whether they are hard-working plumbing supply parts vendors making 200 grand a year...or tollbooth collectors who love keeping their Facebook pages up to date.
When either one of them buys a 2-in-1 Laminating Toaster Oven, they pay the same sales tax. That is called “regressive.” the thought process being that paying 8% taxes on 200 grand in earnings a year is a whole lot easier than paying 8% on 20 grand.
The opposite of regressive is the positive-sounding progressive, where the plumbing supply parts dude pays meaningfully more tax than the tollbooth collector with the really up-to-date social media accounts. Of course, that toll collector didn't study in school, didn't work hard early in life, and now lives in a cockroach-infested apartment, while the plumbing supply vendor is about to purchase their second home. So maybe there is something after all to that "education" thing.
Is progressive tax good? Bad? Maybe, maybe not. Who knows? Not Shmoop. All we know is that progressive and regressive taxation both live in American society. They're the one-two punch that the friendly IRS man uses to knock you out.
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Finance: What is sales tax?67 Views
finance a la shmoop. what is sales tax? and what are progressive and regressive
taxes? thumb tacks horse tax sales tax. all right well sales tax is yet another
way the government collects money to spend on things they need to you know [money in a vault]
govern us. so if you buy an acme chihuahua launcher in california while
you pay eight percent sales tax on it. meaning you thought you were only
spending a hundred bucks and it turns out that the launcher well really cost
you 108 dollars, and then you could tack on whatever damage the chihuahua does.
all right well each state has different sales tax charges. some states are high,
some states are low. but sales tax is considered regressive. which sounds like
a bad word and it while kind of is intended to be bad sounding. why? well
because everyone pays the same tax rate whether they're a hard-working plumbing
supply parts vendor making 200 grand a year, or a lazy bridge Tollbooth taker [pipe maker's logo]
who loves keeping their Facebook pages up-to-date. they pay the same rate when
either one of them buys a two-in-one laminating toaster, oven they pay the
same sales tax rate on that oven, and that is called regressive. the thought
process that being well 8% taxes on 200 grand in earnings a year is a whole lot
easier to pay than 8% taxed for someone earning only 20 grand a year. and yes
politicians want to punish the hard-working, saddle them with more
burden so that the less financially beefy, can you know keep their facebook
pages very up to date. well the opposite of regressive is the positive sounding
progressive tax system, where the hard-working plumbing supply parts dude
pays meaningfully more in tax and tax rate than the Tollbooth cash taker with [man frowns behind a desk]
the really up-to-date Facebook pages. of course that cash taker didn't study in
school didn't work hard early or later in life and now lives in a cockroach
infested apartment while the plumbing supply vendor is about to purchase his
second home, so maybe there is something after all to that education thing. like
kids study in school or you like that guy all right. well is
progressive tax good and regressive tax bad? maybe maybe not who knows not for
shmoop to say, all we know is that progressive and regressive taxation both
live in American society and they're the one-two punch that the friendly IRS man
uses to well you know knock you out. [man in suit throws a punch]