Title: CBPP says Regressive Cigarette Taxes are Okay Because: The Benefit Principle | Tax Foundation
Headings: CBPP says Regressive Cigarette Taxes are Okay Because: The Benefit Principle
CBPP says Regressive Cigarette Taxes are Okay Because: The Benefit Principle
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Content: In essence, the CBPP is endorsing the benefit principle: a principle that states that taxes people pay should reflect the benefits and the costs of services they receive. I assume this means the CBPP will be more sympathetic to these statements now: Raising sales taxes while lowering income taxes in states in order to move to a more consumption-based tax system is okay. Even though low-income households could pay more in taxes as a percent of income than they currently do, they are benefitting from both the public services these taxes are paying for and the resulting economic growth from a more neutral tax system. The Institution of Taxation and Economic Policy is wrong to say that states that rely on sales and excise taxes to fund government programs have “particularly regressive tax systems” and are “terrible” because these revenues fund programs that benefit low-income individuals. U.S. corporations’ foreign income should be exempt from U.S. taxation because that particular business activity does not benefit from U.S. government services and infrastructure. After all, they are already paying taxes to the countries in which they are operating. The current level of progressivity in the tax code is too high considering high-income taxpayers only receive $0.25 cents in government spending for every dollar they pay in taxes. Their tax payments should be lowered, or benefits increased so they, too, can get when they pay for in government services.