Sales tax is like inverting the income tax brackets.

Suppose the rich can buy everything they need with 1% of their income, sales tax is 10%. Then, the rich are paying 0.1% income tax. If the poor have to spend 20% of their income on the same necessities, they are paying twenty times more tax per amount of income.

Both things are true. Income taxes are less efficient, sales taxes are more regressive.

Possibly the most efficient and progressive tax is a land value tax: https://en.wikipedia.org/wiki/Land_value_tax

I’m not sure what your point is. That wealthy people would spend a lower percentage of their total income on necessities, and thus a lower tax per income dollar, sounds like a truism.

This argument assumes the the rich only spend 1% of their income.

Sales tax also puts a larger unavoidable burden on the poor, which I suppose is preferable to some. Then consumer spending among groups who have no room to save leads to them buying cheaper products, increasing numbers of which are cheap or shoddy alternatives, and in the case of non-food items, cheap imports.

In many cases, like Texas, necessities like food, medicine, baby products, etc are exempt from sales tax to reduce this burden.

Income tax may disincentivize earning at the margin but also incentivizes investment because businesses can deduct expenses. In any given tax period a business will have a strong incentive to re-invest earnings which is the easiest way to avoid paying income tax.

From a theoretical perspective it seems to me that income tax would favor economic growth while sales tax, which can't be avoided, would depress economic growth.

> but also incentivizes investment

No, it just doesn't disincentivize investment, same as sales tax.

Let's say I am in the last quarter of a tax period where I am going to have to pay taxes on a million in revenue.

Now let's say that I am planning to invest in some new equipment in the next 6 months.

If I buy the equipment now I don't have to pay taxes. If I wait I do.

How is that not an incentive to invest?

Every dollar in business expense is discounted by the amount of income tax not paid. The higher the income tax the greater the discount on business expenses and the greater the incentive to do something with cash other that hoarding it.

> If I buy the equipment now I don't have to pay taxes. If I wait I do.

If you wait until the next year, you'll don't have to pay the taxes next year instead of not paying them this year.

But my point is about income vs sales tax:

- 0 % sales tax, 10% income tax:

You don't pay taxes on what you invest (assuming deduction)

- 10 % sales tax, 0% income tax:

You don't pay taxes on what you invest (assuming deduction)

Result: You cannot claim that people are investing more just because you have income tax.

You could of course assume that putting a tax on everything except investment will encourage investment. But it's the same as if you raise the price of everything except water to encourage the consumption of water.

If you ask why this wouldn't work, think about how taxes affect disposable income.