Thursday, January 28, 2016

The Pale King : progressive sales tax

‘Irrelevant’ Chris Fogle tells the story of Illinois’s (imaginary) 1977 experiment in a progressive sales tax, with rates of 3.5% on purchases under $5.00, 6% under $20.00, 6.8% under $42.01, and 8.5% for everything above $42.01.

$42.01? It’s a David Foster Wallace novel.

The result, Fogle says, was statewide chaos, with shoppers buying groceries one small bag a time and pumping gas in $4.99 increments. But there was worse to come.

David Foster Wallace, The Pale King (Boston: Little, Brown, 2011).

These troubled Illinois times prompted me to think of this passage. Illinois is one of a handful of states with a flat income-tax rate. The Institute on Taxation and Economic Policy calls Illinois one of the “Terrible Ten,” those states that “tax their poorest residents — those in the bottom 20 percent of the income scale — at rates up to seven times higher than the wealthy. Middle-income families in these states pay a rate up to three times higher as a share of their income as the wealthiest families.” Here’s some thinking about what a progressive income tax, or even a slightly higher flat rate, would mean for the state.

Related reading
All OCA David Foster Wallace posts (Pinboard)

[Why ‘Irrelevant’? Notice the final sentence in the passage. Wallace, by the way, used single quotation marks.]

comments: 4

Diane Schirf said...

NY's sales tax is lower than IL's, which is saying something. It felt like a bargain when I was practically stripping the Letchworth State Park gift shop of souvenirs. :)

Michael Leddy said...

I did a doubletake before I realized you mean the state, not the city. (That’s me being Brooklyn-born and provincial.) NYC’s sales tax is 8.875%.

Diane Schirf said...

I think I mentioned it in my post about Hamburg, but I was surprised (given how long I'd been away, how long I've been in Chicago, and how little of the world I saw as a child) how sparsely populated western New York is — very few exits on I90 between Erie and home. Everyone I know has experienced that moment: "Where are you from?" "New York." "Oh, I love New York" or "You don't sound like it," etc., and then we have to point out patiently that there is more to New York than one corner.

Would like to get here some day:

Michael Leddy said...

It sounds a lot like the more rural parts of downstate Illinois (meaning I90, not the park!).