The political rap on taxes like the sales tax is that they are unfair because they are regressive, meaning that  they cost low income families a greater proportion of their income than wealthier families.  I want to examine this particular issue, because while taxes may be unfair or bad for any of a number of reasons, "regression" by itself is not one of them. It may be that some regressive taxes are unfair taxes, but it will not be because they are regressive.

Take the sales tax as a typical example of what is a regressive tax, particularly when food and prescription drugs, or other necessities are subject to it. The claim is that since sales tax is a strict percentage of the cost of the items purchased, the low income families have to pay just as much tax as the rich on the necessities they purchase and therefore have to pay a larger share of their income toward sales tax on those necessities than the rich do, since a larger portion of their expenses are for necessities, not having as large a discretionary part of their income, if any. Contrast this with something like personal income tax where those who earn more money pay a higher percentage of tax in a step-wise scale, while those below a certain level of income pay no tax. There are also taxes where the percentages are the same, but the wealthy typically pay more -- such as automobile tags or home property taxes -- because they purchase more expensive items and thus have to pay higher taxes, though those taxes may or may not be a larger percentage of their income then what less wealthier people pay.

Notice first that in this sense of "regressive," necessities themselves are regressive, in that the low income families are more likely pay a higher percentage of their income toward necessities than do the rich. Both of these statements, of course, assume that the rich do not have a proportionally higher set of needs for food or medicine. In the case of medicine, that may not be true, for a wealthy ill person may have to pay proportionally more of his income toward pharmaceuticals and their sales tax than does a healthy low income person.

Moreover, insofar as wealthier people spend proportionally more of their income on sales taxed goods, though they may not all be necessities, wealthy people may spend as high or even a higher proportion of their income on sales tax than do lower income people.

But it is probably safe to say that on average lower income people tend to pay a larger percentage of their income for sales tax on necessities than do wealthier people. The question though is whether, if this is true, it is unfair. For purposes of discussion here, I do not want to question whether it is fair that there are rich and poor or unequal incomes in the first place; nor do I wish to consider people that may have higher incomes for unfair or unjust reasons. For the purpose of this discussion only, I will stipulate just for hypothesis sake, that we are talking about a population where everyone's income is fair and just, because I only want to consider whether regressive taxes are unfair by their very nature. 

With any purchase, there are two aspects, but in any political discussion, unfortunately normally only one of those aspects is mentioned, depending on which side one is espousing. The two aspects of any purchase are the cost and what you get for that cost. Typically those arguing against taxes talk about the cost but not about what services that cost provides. Typically those arguing for programs talk about what the program provides that is important, but not about the cost. The issue of fairness will depend in part on whether one is getting a good deal for one's money -- whether the product or service is worth the cost. If you buy something good that you need at a fair price or, even better, at a fraction of the cost, that is normally a good deal. If you get something bad or that you do not need, it is often a bad deal no matter how little you pay. The question for any government tax-supported program ought to be how necessary and how good it is, particularly in relationship to the cost. But the argued polarizing political issue almost always is, though it should never be, how good it is apart from the cost or how costly it is apart from whether it is good or necessary.

Another issue involving fairness in the matter of regressive taxes is how the burdens and benefits are divided. It is not fair, for example, to expect people to sacrifice at great expense or risk to themselves for the mere, particularly inconsequential, benefit of others. First, there are special circumstances where one incurs special obligations to others. If one borrows money or makes a promise or accepts a purchase order or payment, one is obligated to pay the money back, keep the promise, deliver the order or provide the service even if it causes some hardship to do so. There are, of course, possible extenuating circumstances that may override such obligations, but without such circumstances, the hardship is not sufficient to negate the obligation. 

But even without incurring special obligations, we all have obligations to help others when the help would mean a lot to them and not cost us anything or much at all. As the cost or risk to the agent increases or the benefit to the recipient decreases, the obligation decreases until at some point the cost is so great or the benefit so small, that it is not fair to expect anyone to do the act, though it is not wrong for them if they wish to. At some point beyond that, however, it would even be wrong for someone to do an act that is extremely costly for almost no worthwhile benefit to anyone else. Some sacrifices are foolish and wrong. For example, if a fire fighter risks his/her life, with only a small chance of success, to save a child from a burning building, that is admirable though not obligatory. But if a fire fighter goes back into a building engulfed in flames in order to retrieve the child's teddy bear, that would be wrong.

The above paragraph is not a paragraph about what determines all our obligations. It is only a paragraph about the issue of fairness in how much we should be expected to do for others. I am not saying that we only have obligations to do what benefits others, nor am I saying we only have obligations to benefit others when it does not cost us anything or make us risk anything. I am saying here that it is not unfair to expect people to help others under certain conditions -- that wealthy people cannot say it is unfair to have to help those less well off in cases where they can, particularly in those cases where the cost to them is relatively little and the benefits to others are relatively great. With regard to consideration of fairness alone, the obligation decreases, but does not thereby necessarily disappear, as the proportion between the benefits and the costs decreases. 

So, for purposes of this discussion, let us assume that there is a tax which is regressive and that it provides a real benefit. For example, let us assume it provides not just schools, but actual, meaningful education for students. If schools provide little or no benefit to students and the community, or if they provide little benefit in proportion to what the taxes cost people, then this is a bad tax whether it is regressive or not. That is why we have to assume that the tax provides reasonable value and benefit in order to see whether regressiveness makes it wrong.

Let us also assume, what also may be a counterfactual, that payment of the tax for education does not prevent a family from providing a better education for its children by sending them to a private school -- that this tax is not what makes a better, private education for families unaffordable. If a tax for education does rob families of the chance to better educate their children, then, whether regressive or not, it might also be a bad or wrong tax.

So, by assumptions then, we have a regressive tax that provides a good education for children and that does not keep anyone from better educating their children. The tax is levied in a community where those who are wealthier are not somehow unfairly wealthier to begin with. The question then is whether the tax is fair. With regard to regression, the concern of fairness is typically reserved for issues of fairness to the poor. But we also need to be concerned about fairness to the rich. So the tax should not put some sort of undue burden on the rich, whatever that might be. And moreover, the tax should be such that it is better and fairer than any alternative tax that might fund education. In other words, if the alternative to a regressive tax unfairly burdens wealthier people or foists on them unreasonable obligations, the regressive tax might still be better if it also does not unfairly burden those less wealthy. What we are looking for essentially is an effective tax that also is the most fair and reasonable. And the question is only whether such a tax might be regressive.

To be regressive does not mean that the tax in absolute terms or formula is the same for everyone as in an 8% sales tax. It just means that it costs lower income people a higher proportion of their income than wealthier people. So even if lower income people got some sort of a price break or rebate for sales taxes they pay, it could end up that though they are no longer paying the same tax rate as wealthier people, that the tax is still regressive because even with the differential formula they are paying a higher percentage of their income toward the tax. However, to keep this simpler, I will presume the regressive tax in question is a flat rate tax charged equally to everyone. Is such a regressive tax necessarily unfair?

It will not be unfair to the wealthier if it costs them relatively little compared with the amount of good it provides others, and if there is not a fairer or otherwise better alternative to provide at least as good a benefit. Arguably a good community education system even provides benefit to the wealthy, since the more educated everyone is, the more talent and skill available even to the wealthy than would be available if only a fraction of the community were educated. While most of the time political arguments to this effect talk about the costs of building prisons to house the uneducated who turn to crime, I would contend the real cost to the community for not truly educating the lower income members is not (only) the costs of crime, but the opportunity costs lost from not having as many people available to make real and significant contributions.

That leaves the original issue. Is the tax, because it is regressive, then unfair to the lower income members of the community?

Not necessarily. If they get something worth the cost or more; and if the tax does not unduly rob them of something more important than education that they could afford or have without the (size of the) tax, then the tax, whether regressive or not, is not unfair.

Suppose, for example, that all 8% of a sales tax goes toward education, and that a family with income of $15,000 buys $10,000 worth of taxed goods, all of which are necessities, thus spending $800 of their $15,000 on sales tax for necessities. That is 5.33 of their income. 

Contrast that with a family with a $200,000 income which buys $50,000 worth of taxed goods, half of which are for food, clothing, prescription drugs and other "necessities" though many of the items or their costs will not really be what might be considered necessary. Some of the costs of clothing will be for designer labels; much of the food will be prepared or gourmet items or restaurant purchases. Still, the family will pay $4000 in sales tax, and $2000 of it will be for food, clothing, pharmaceuticals, etc. That will be 2% of their income for sales tax and 1% of their income for the tax on the food, clothing, etc. 

The lower income family thus spends more than five times the percentage of their income on sales tax on necessities that the wealthier family does. And perhaps even ten times if the wealthy family had been more frugal in their clothing and food purchases.

The argument based on percentages then is that because low income people have to spend 5 to 10 times the proportion of their income on sales tax for necessities that wealthy people do, sales tax is grossly unfair to low income people. Nevertheless, notice that the wealthier family is contributing five times the amount toward education that the lower income family is. It is not clear just from these numbers that this is somehow unfair to the lower income family.

But even more, suppose that the school system spends $5,000 per pupil to operate. And suppose that both families have one child which they send to public school. During the 13 years the child is in school (K-12), the low income family will have contributed $10,400 for an education on which the community spent $65,000; the rich family will have contributed $52,000. (People without children in school paying sales tax, and other sources of revenue, such as property tax and state income tax, will make up the difference between school expenditures and sales tax revenues.) The wealthier family will have contributed, in sales tax alone, to 80% of the cost of the child's education. The lower income family will have paid for 16% of their child's education. So even though the low income family pays 5 to 10 times more of the percentage of their income toward schooling that the wealthier family pays, the wealthier family pays 5 times more of the cost of the schooling than does the lower income family. The lower income family gets a $65,000 education for $10,400 whereas the wealthier family has to spend $52,000 for the same education for their child.

Of course, one pays sales tax longer than 13 years (and, of course, many families have more than one child that attends public school), so both families with one child will eventually pay more for education than what these numbers indicate, but the wealthier family will still pay five times the amount overall that the lower income family does. On the one hand they can afford it, but that does not mean the lower income family should not have to contribute something for an education that theoretically is worth far, far more than what they are paying.

If we just look at percentage of income paid in sales tax for education, it appears the lower income family has to pay far more of its share than the wealthier family. If we look at the return on investment, the lower income family gets five times more for its money than does the wealthy family. The lower income family gets a 6.25 times return in educational dollars; the wealthier family gets a 1.25 times return. Both sets of numbers apply, so it is impossible to tell just from looking at these kinds of statistics whether the situation is fair for either family. 

What is needed is to look at issues other than these in order to tell whether the tax is fair for either family. Just pointing out the tax is regressive is not sufficient to show it is unfair. One has to point out that it is unaffordable for low income families and that it gives them back too little in return, and that there is some reason why those who can pay more ought to do so. An argument could be made, just looking at the numbers that the wealthier family is giving back to the low income family a great return for the lower income family's investment. And if the low income family has sufficient income to live a decent life along with paying taxes, it is not necessarily an unfair situation. Moreover, if they have children by choice and if there were nothing unfair about what determines that their income is lower, regressive taxes would not necessarily be unfair just in themselves. It is only if lower income people were having to pay a disproportionate, unaffordable, or unreasonable amount for public services for which they would get little in return that would make such taxes unfair. And it would only be if the rich ought to pay far more than they do that would make some tax rates, regressive or not, unfair. But those things cannot be determined by looking at whether a tax is regressive or not. Regression is irrelevant.