It is fair that people who earn more income should pay a higher proportion of their income in tax. The tax supports the administration of their country which provides the sort of operating environment in which they are able to earn their wages in the first place. Even when paying a higher marginal rate on the top end of their earnings, they will still take home more than people who are paid less with a tax rate anything up to 100%.
It is unfair that people who earn more should pay at a progressive rate. Even on a standard rate, they already pay more tax, because they have a higher taxable income. Therefore progressive tax rates are a form of double taxation, as higher earners pay tax on more income, and then at a high level. This is further unfair to them since high earners are the least likely group to benefit from much taxpayer-funded activity e.g. welfare.
Progressive taxation forms a buffer for the lowest earners in society. This is because the lowest tax band will apply to earnings beneath an initial threshold. Therefore, the less one earns, the higher percentage of one’s pay is not taxable. A certain “block” at the bottom of each income may be tax free altogether, and by definition this will form a much larger proportion of a low earner’s income than it would in the income of a high earner. This protection for the poorest is important, because most countries also operate customs tariffs and sales taxes, which tend to hit the poor more than the rich in terms of the proportion of their income going in indirect taxation; progressive direct taxation redresses the balance.
Progressive taxation is a form of large-scale redistributionist economics that simply pushes the burden of funding government activities higher up the income chain in larger amounts. As well as being unfair, this concentration of taxation amongst a narrow group of taxpayers introduces a higher risk of a sudden drop in tax take, for example if a recession means lots of executive jobs...
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