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If payroll taxes are removed and sales taxes are increased,
Posted on: April 21, 2025 at 14:35:25 CT
KCT-BoneTiger MU
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the impact varies depending on income level, spending habits, and employment status.
Who Benefits More:
Higher-Income Earners
Why: They pay more in payroll taxes due to higher wages (up to the Social Security cap), but they tend to spend a smaller percentage of their income on taxable goods and services.
Result: Bigger tax savings from eliminated payroll taxes, less burden from higher sales taxes.
Who Is Hurt More:
Low-Income Earners
Why: They pay a lower dollar amount in payroll taxes, but spend most or all of their income on consumption, much of which is subject to sales tax.
Result: Might save a little on payroll taxes but end up paying more overall due to higher sales taxes.
Retirees and Non-Workers
Why: They don’t pay payroll taxes (since they're not working), but still buy goods and services.
Result: No gain from payroll tax removal, but higher costs from sales tax.
Who Benefits More:
Higher-Income Earners
Why: They pay more in payroll taxes due to higher wages (up to the Social Security cap), but they tend to spend a smaller percentage of their income on taxable goods and services.
Result: Bigger tax savings from eliminated payroll taxes, less burden from higher sales taxes.
Who Is Hurt More:
Low-Income Earners
Why: They pay a lower dollar amount in payroll taxes, but spend most or all of their income on consumption, much of which is subject to sales tax.
Result: Might save a little on payroll taxes but end up paying more overall due to higher sales taxes.
Retirees and Non-Workers
Why: They don’t pay payroll taxes (since they're not working), but still buy goods and services.
Result: No gain from payroll tax removal, but higher costs from sales tax.
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If payroll taxes are removed and sales taxes are increased, - KCT-BoneTiger A - 4/21 14:35:25