"Under a consumption tax, people in the lowest incomes pay the highest percentage of their income because they have to spend all of their income in order to meet their basic needs," said Smolnisky.
That means every dollar a low income family and spends for things like groceries, clothes and housing is taxed by the state, while most high income families do not spend all of their yearly income.
"They can actually save money, they can invest it, put it in a retirement account, by stalk at At&T and those transactions are not taxed," said Smolnisky.
While higher wage earners pay a much smaller percentage of their income towards the state's taxes, they generally end up spending more money.
"What we collect at the state government is dollars, not percentages and the tax burden on the higher income folks, they will pay more in dollars," said Representative Mickelson.
"What you purchase is what you pay in taxes, so if you can afford a $300,000 boat, you pay three percent on that boat," said Azzara.
Smolnisky says an income tax system is more progressive as it taxes a percentage of a person's entire income; however, she also says the "Who Pays?" study is not an argument against a sales tax system; it's simply data to show the impact a state's tax system can have on resident of every income level.
Friday, August 1 2014 10:19 PM EDT2014-08-02 02:19:37 GMT
There is no doubt the Sturgis Motorcycle Rally brings a lot of good to the area especially from a tourism and economic standpoint. But when you have a sudden, massive increase in population, there's the potential for unsavory and illegal behavior.More >>
There is no doubt the Sturgis Motorcycle Rally brings a lot of good to the area especially from a tourism and economic standpoint. But when you have a sudden, massive increase in population, there's the potential for unsavory and illegal behavior. More >>