Why everything is like a regressive tax

Toll booths

With all the talk on how to fund our government and the various projects we need to undertake, it’s made me think about that phrase “regressive tax”. As in, “there was no support for that initiative, because it was seen as a regressive tax on the poor.”

For example, in the inexorable push to widen highways, many jurisdictions have realized that, well, they’re broke, and have no money for upkeep, even if they’re given the money to build something new.

This has led to the idea of tolling roads, especially in some places that have never had them before. Close to home, tolls may be coming to Portland soon.

Tolling roads is nicely self-contained: if you use a road, you pay for the road. If you don’t, you don’t.

The money you spend goes to fund road improvements (which we now know aren’t otherwise paid for), and also it has the side benefit of reducing traffic (since people like teenage me will avoid tolls where they can).

A common argument against tolling roads is that it’s a “regressive tax” on the poor. The idea there is that the cost will be more burdensome to those with lesser incomes.

I’ve been rolling this around in my head for a while. And I’ve arrived at a question:

Isn’t, well, everything, a regressive tax?

And if everything is a regressive tax, than isn’t that not a good argument to use in opposition?

Sandwich math

There’s a sandwich shop near my home that I go to occasionally. A sandwich there costs somewhere around $10.

That sandwich costs the same regardless of how poor or rich I am. I could be a billionaire and it would still cost the same thing.

Now, isn’t that regressive? It costs those with lower incomes more, proportionally, than those with higher incomes. If I make $20,000 a year, that sandwich is 0.6% of my gross monthly income. If I make $100,000 a year, that sandwich is only 0.012% of my gross monthly income, one fifth as much.

But think for a second, and you can apply this analysis to pretty much anything, anything from jeans to plane tickets.

Now, granted, those with more income have more choices, so they may buy more expensive jeans, and those with less income may choose Greyhound instead of flying, but those are still just individual choices.

In general, everything we spend money on is technically regressive.

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Tell me your income and I’ll tell you what it costs

You might think that tying cost to income is impossible. You might imagine, at the checkout counter of your local supermarket, hearing: “Please tell me your adjusted gross income for the past year so I can finish ringing up your total.” And the price would rise or fall accordingly.

Yeah right.

But actually, such a thing happens all the time. I don’t know if you’ve heard of a program called SNAP (also known as “food stamps”), but that is precisely an attempt to adjust the proportion of how much food costs based on income. It’s crudely done, and clearly doesn’t go far enough for the people who need it most, but it is a workable solution, and no AGI needed.

We can turn regressive into progressive

I support taxes (such as tolls) that push us into behaviors that benefit us as a society, even if they are inconvenient to us personally. Money is a pretty good motivator, as you may have noticed!

If something happens to put more pressure on certain members of society, this can be mitigated. Tolls can have rebates you can apply for. Public transit can have a low-income program. We can make life easier for those who need it.

Of course, this requires us to have empathy for our fellow humans, and there’s the rub. It requires us to believe that someone who has less income isn’t somehow deficient or lazy. Or rather, to allow for the possibility that some people will be lazy, but allowing for that that is a small price to pay to help those who truly need it.

Now that’s an idea that’s as far from being regressive as it gets.

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