Regressive Taxation


Measure “A” is a REGRESSIVE TAX, meaning that, the less money you take home the higher your effective tax rate.

It’s the exact opposite of a progressive tax like federal income tax. Progressive taxation was a major reform of the early 20th century Progressive Era which made it possible for folks to climb the economic ladder without shouldering an unfair burden of taxation before one even had the means to contribute.

In other words, progressive taxes, like the income tax, increase according to one’s means. Everyone pays the same rate on base income (the lower brackets), but those who make extra dollars pay increasingly higher rates on just those extra dollars (the higher brackets). This means that, for income tax, higher income people pay a higher effective (or average) rate of tax, whereas lower income earners pay a lower effective rate.

But sales tax is just the opposite. The less money you make, the HIGHER your burden of tax. This is understood when one considers the economics of discretionary vs. non-disposable income:


Discretionary income is whatever is left from take-home pay after you’ve purchased the basic necessities to survive and live a minimally decent life. For a family of four the federal government says that average amount is $24,300, but of course in an area like Long Beach, with a cost of living much higher than the national average, such a family would really need much more.

fed pov level

Let’s say it’s $50,000 in Long Beach, just for argument. That means a family of four needs to take home $50,000 before they even begin to cross over from non-disposable into discretionary dollars of income. In other words, every dollar they earn gets spent right away, and much of that spending is on goods subject to sales tax. Therefore they feel every percentage point increase in sales tax directly, immediately, every day.


Of course, those with lots of discretionary income don’t escape the increased burden of higher sales tax. They have to pay a lot more on all the nicer or more luxurious items they buy. But they also save and invest a lot of that extra income and therefore pay sales tax, whatever the rate, on a much lower share of their income.