Dean Baker: Tax Games and Redistributing Income Upward

Posted: 02/05/2013 5:59 am

The corporate profit share of national income is near a post-World War II high. The share of income going to the richest 1 percent is almost at its pre-Depression peak.

These would seem like impressive accomplishments but the process of upward redistribution, from Joe Sixpack to Joe Six Houses, is a never-ending struggle. Toward this end, Louisiana Governor and Republican wunderkind Bobby Jindal has just proposed replacing the state's income tax with a sales tax.

Sales taxes will generally be more regressive than income taxes for the simple reason that low- and moderate-income people will spend a larger share of their income than upper-income people. That means that the portion of income that wealthy Louisianans save will escape taxation, imposing a larger burden on low- and middle-income families in any revenue neutral shift.