We all get taxed every time we turn around, but the governments (fed, state, and local) need to generate revenue for the services that they provide… What kind of tax is most fair? A tax on income? Flat or sloped toward the wealthy? Property tax - is it fair to have a perpetual tax on the property you own? What about sales tax? Charging people based on their purchases. What we typically have is a mix of all three, but in varying proportions… which proportion is best? For instance, in Texas there's no state income tax, but property taxes are as high as 3% (maybe higher).
What do you think?
In the order of fairness, from fairest to least fair:
1. Income taxes, if graduated. A graduated income tax (with rates that rise as taxable income rises) is the ONLY tax that adheres to the first rule of taxation: Make sure that the taxpayer can AFFORD to pay the tax.
2. Property taxes. Assuming that your income continues to rise as taxes rise AND that you purchase wisely, i.e. what you can afford, property taxes loosely adhere to the first rule of taxation. The problem arises once you retire and have to (normally) live on a fixed income. Some jurisdictions deal with this by offering some sort of tax break to retirement age residents. Even so, the ravages of inflation over time usually erode the value of the tax break and often force elderly residents to sell their homes to escape the tax burden.
3. Sales taxes. These are the worst taxes of all. Lower income folks wind up paying a FAR higher portion of total income in tax with most sales taxes. Some jurisdictions attempt to level the playing field by exempting basic necessities such as food and clothing from the tax though that is by no means universal.
4. Income taxes, not graduated. A flat rate income tax is as devastating to the poor as sales taxes are. Some jurisdictions attempt to deal with this by exempting a base amount of income from the tax through exemptions and standard deductions, however most attempts to do so fall far short of wiping out the tax for the working poor.