Is a Sales Tax Really Regressive?

Washington  is one of the few states that does not have an income tax. Instead, it has a hefty sales tax. Every few years politicians dust  off the old state income tax playbook and try to sell it to voters as an  alternative to the sales tax.

The  last time this happened was 2010, when we voted on I-1098, which was a  voter initiative to lower real property taxes, eliminate the B&O tax  (a tax that businesses pay), and impose a state income tax. Voters resoundingly rejected it.

Proponents  of I-1098 argued (among other things) that the sales tax is  “regressive,” meaning that it hurts poor people more than rich people.  But when measuring who is poor and who is rich across an entire  population – in order to argue whether a tax is fair – it gets complicated  quickly. Continue reading