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This House supports a progressive tax rate
This House supports a progressive tax rate
Progressive taxation is a fiscal policy system in which wealthier people pay larger proportions of their earnings in taxes than do less well-off people. Generally speaking, states that implement progressive tax regimes do so by setting up a number of tax brackets in which people in society are sorted. People who earn more pay more in taxes. For example, the United states has five tax brackets in place within its federal income tax ranging from 10% for income between $0 and $8500 to 35% for income over $379150. Most states have some form of progressive tax within their tax system, this is usually their income tax, some however have a flat rate income tax (also coming in various forms), where all employees pay the same or similar rate of tax. These countries include Russia, Ukraine and Mauritius.
Proponents of progressive taxation argue that wealthier people are better suited to pay more taxes, as they have disposable income, require each unit of income less than does a poorer person, and have a greater burden to the state because of the benefits it has given them to become wealthy. They also promote the value of progressive taxation as a means of promoting a more equal and just society. Opponents of progressive taxation argue that it is an unfair burden to expect wealthy people to have to give up a larger proportion of what they earn simply because they are successful and that progressive taxation tends to damage economic growth by dampening work ethics and investments; in other words progressive taxation is unjust and inefficient. In the end, both sides contend to be the upholders of social justice and of better economic management.
 IRS, ‘Estimated Tax for 2011’, http://www.irs.gov/publications/p505/ch02.html#en_US_2011_publink1000234349
|Points For||Points Against|
|Those able to pay more should pay more into the tax system||Individuals’ property and income are an index of deserving achievement, and of value contributed in the market place to society|
|Those who have more owe more to the state||Progressive taxes place an unfair and disproportionate burden on the wealthy|
|The state should promote the efficient distribution of income in order to maximize the utility derived by society from its economic resources||The ability to orchestrate a progressive taxation regime gives undue and dangerous power to the state|
|Progressive taxation promotes a more equal, more harmonious society||Progressive systems are invariably highly complex and inefficient in implementation, breeding the knock-on inefficiencies of evasion and avoidance|
|A well-implemented progressive taxation scheme serve to promote economic growth||The aim of taxation should be to provide equality of opportunity, not of outcome|
Remember to choose a winning argument!
Those able to pay more should pay more into the tax system
The wealthy have more disposable income and are more financially secure than are the poor and economically tenuous. For this reason, a progressive system of taxation puts the tax burden more heavily on the wealthy which has the wherewithal to pay. Progressive taxes make everyone sacrifice equally, since true equality of taxation means equality of sacrifice. It is ludicrous to expect the poor and less well-off to pay the same proportional amount in taxes as the wealthy since they have to spend most of their income on essential goods like food and shelter; it is unjust to gain all state revenues from regressive taxes like VAT, since the wealthy have excess resources they can do without while not overly influencing their standard of living. Progressive taxation serves to help the poor and worst off while not leaving the wealthier worse off, since they still have more money. Clearly, progressive taxation is just in terms of burdens on individual taxpayers.
 Young, H. Peyton. 1990. “Progressive Taxation and Equal Sacrifice”. The American Economic Review 80(1): 253-266.
 Shapiro, Robert. “Flat Wrong: New Tax Schemes Can’t Top Old Progressive Wrongs”. Washington Post. 1996. Available: http://www.washingtonpost.com/wpsrv/politics/special/tax/stories/top0324...
Simply because someone can feasibly pay more does not mean he should be obligated to do so. Everyone’s property rights should be considered equal; the property rights of the wealthy should not be trodden upon by the state while leaving that of the less well-off alone. Fundamentally, any amount of appropriation of what belongs to an individual for the benefit of others is a kind of theft, and if the state is going to tax people, morally it can only do so if it treats everyone equally, which progressive taxation certainly does not do.Improve this
Those who have more owe more to the state
Wealthier people benefit from the state more than do those who are worse off for two reasons. First, they have more to lose in the absence of the state. Without the rule of law, people would no longer be bound by any power to respect one another’s property rights. A rich person has much more to lose should there be a reversion to the state of nature; nothing would shield him from the mob. For this reason it is in the interest of the wealthy to preserve the just rule of law in the state and to uphold its institutions. It does so by funding it through taxation, and those who have more to lose have a greater interest in paying more to ensure its continuity. The second benefit the rich have is that they have gained more from the state than have the poor and less well off. It is only within a state system that maintains order and provides vital services that markets can form and be maintained. Warren Buffett, for example, has argued that he could never have amassed anywhere near the sort of wealth he has in a country without the rule of law, such as Bangladesh. Wealthy business owners and corporations use state utilities far more than poorer individuals quite often, when for example they use public roads to move their vast fleets of trucks, while individuals only drive their personal car. The state guarantees property rights, which allows markets to form and provides the protections and services to businesses that need them to function. Those who profit from that have an obligation to contribute to its upkeep.
 Lakoff, George and Bruce Budner. “Hidden Truths of Progressive Taxes”. Institute for America’s Future. 2007. Available: http://www.tompaine.com/articles/2007/04/16/hidden_truths_of_progressive...
 Terkel, Amanda. “Warren Buffett: ‘I Should Be Paying a Lot More in Taxes’”. Huffington Post. 2010. Available: http://www.huffingtonpost.com/2010/11/21/warren-buffett-paying-more-taxe...
Possessing greater wealth does not obligate an individual to contribute more to the state by any moral precept. All people’s property rights should be protected equally. Citizens who succeed by their own industry and accrue wealth should not be punished for their success, or be expected to contribute more to a state that provided the same basic framework of law and rights to all citizens, rich and poor.Improve this
The state should promote the efficient distribution of income in order to maximize the utility derived by society from its economic resources
All goods suffer from diminishing marginal utility, and this includes money. The more money someone, the less happy they are made from each successive addition of wealth after a certain point. One might be able to buy a second car or a second house with extra money, but eventually one runs out of things one particularly wants to buy or own. When wealth is unevenly distributed in society, the wealth of society is inefficiently distributed. The aim of the state must be to attempt to maximize the aggregate utility of its citizens insofar as it is able without damaging the economy. With progressive taxation, wealth is effectively reallocated to poorer people, who gain more utility than the wealthy lose in the process. The state has a right to do this not only because it generates a more efficient distribution of income than the market does, but also because income is partly a collective good. Ownership rights to property and the ability to expand them is only possible within the framework of the state; thus the state can make a moral ownership claim to some of the products of the services it provides, and does so most effectively through the mechanism of progressive taxation.
 Thune, Kent. “The Diminishing Marginal Utility of Wealth”. The Financial Philosopher. 2008. Available: http://www.thefinancialphilosopher.com/2008/08/the-diminishing-marginal-...
 Weisbrod, Burton. Public Interest Law: An Economic and Institutional Analysis. Berkeley: University of California Press. 1978.
It is not the state’s role to efficiently distribute economic resources; the market does a much better job of that. When the state seeks to distribute income, there is substantial efficiency loss. This is due to the so-called “leaky bucket” of distribution, as money is lost or wasted through the bureaucratic processes necessary to redistribute income and wealth. Progressive taxation only serves to exacerbate these inefficiencies by breeding more and more complex structures for their implementation.Improve this
Progressive taxation promotes a more equal, more harmonious society
Progressive taxation provides real equality of opportunity, and serves to level the playing field so that social classes are not fixed. Everyone deserves a chance to climb the economic ladder, but without a regime of progressive taxation this is nearly impossible. If tax revenues are generated by flat or regressive taxes the poor will necessarily have to contribute substantial portions of their own income to the state, cutting into their ability to consume and save. Social services must still be financed, and the best way to do that is through a progressive tax regime that makes those most able to pay more pay more; if more of the burden is placed on the poor and disadvantaged, as it must in a flat-rate system, fewer people will be able to climb out from the social strata in which they are born. The more equal society created by these taxes is thus more equitable, since it affords people greater opportunities. It is also more harmonious, since well-funded services keep people from feeling desperate and to turn to such things as crime. But greater equality itself can also be beneficial, as it reduces distinctions between groups in society, and prevents stratification into social classes based on wealth. People who are more alike can sympathize and empathize more with one another. Progressive taxation thus promotes a very real and powerful social message that can greatly benefit social cohesion.
 Young, H. Peyton. 1990. “Progressive Taxation and Equal Sacrifice”. The American Economic Review 80(1): 253-266.
A more equal society is not necessarily a more harmonious society, and is certainly not a more just one if it was created through the process of progressive taxation. Social harmony relies on trust between all citizens, rich and poor. Progressive taxes only serve to divide society, as the rich become resentful of the poor and the poor feel more and more entitled to the possessions of the wealthy cash cow. In terms of justice, equality is not an end in itself. Opportunities can be afforded without compromising the rights of citizens by enacting a draconian scheme of leveling.Improve this
A well-implemented progressive taxation scheme serve to promote economic growth
Progressive taxation can serve very effectively to increase the economic welfare and development of societies. It does so in three ways. First, it lifts the poor out of poverty by redistributing the tax burden from them onto the wealthy who are more able to pay, and gives them more disposable income to put back into the economy, which increases the velocity of money in the system, increasing growth. Second, workers will be more likely to work harder since they will feel the system is more equitable; perceptions of fairness are very important to individuals. People will still work and save since they will want the goods and services they always did in the presence of progressive taxation, and will thus not be less motivated as detractors of progressive systems suggest. Third, progressive taxes serve as an automatic stabilizer in the event of recessions and temporary downturns in the market, in the sense that a loss of wages due to unemployment or wage cuts places an individual in a lower tax bracket, dampening the blow of the initial income loss. The American economy is a perfect example of how progressive taxation promotes broader economic growth; data shows that average yearly growth has been lessened since the 1950s after the reduction in progressively in the tax system. In the 1950s annual growth was 4.1%, while in the 1980s, when progressively in taxes fell dramatically, growth was only 3%. Clearly, a progressive tax regime is best for workers and the economy generally.
 Boxx, T. William and Gary Quinlivan. The Cultural Context of Economics and Politics. Lanham: University Press of America. 1994.
 Batra, Ravi. The Great American Deception: What Politicians Won’t Tell You About Our Economy and Your Future. New York: John Wiley and Sons. 1996.
Progressive taxation does not improve economic growth. This is because, when the rich are heavily taxed, they have less likely to invest in new enterprises. Higher taxes serve as a disincentive to investment, both domestic and foreign. As to economic growth in the United States, statistics can also be misleading. The high growth of the 1950s was due to the fact that the United States was essentially the only industrial power whose infrastructure was not devastated by World War II. A better data set can be seen between the stagflation of the 1970s with its high taxes, and the relative increase in economic growth that followed with the tax cuts of the 1980s. Soaking the rich only serves to reduce the economic success of a country.Improve this
Individuals’ property and income are an index of deserving achievement, and of value contributed in the market place to society
A progressive taxation system essentially assumes that the property rights of the poor are more sacred than those of the wealthy. Somehow the wealthy have a less proportionate ownership right than do the less well-off simply by dint of their greater wealth. This is the height of injustice. An individual’s income is a measure of his overarching societal worth, by reflecting his ability to produce goods and services people find socially desirable and to signify his level of competence and desirability by his employer. The state should not punish people for this greater social worth by taxing them disproportionally to others. When it does so it expects people to work for the sake of others to an extent that is not fair, effectively consigning them to a kind of forced labor, by which parts of the wealth they work to acquire is appropriated by the state to a degree beyond which it is willing to do to others. Such a regime is manifestly unjust.
 Seligman, Edwin. “Progressive Taxation in Theory and Practice”. Publications of the American Economic Association 9(1): 7-222. 1894.
 Nozick, R. Anarchy, State and Utopia. New York: Basic Books. 1974.
Income alone is not a sufficient measure of an individual’s contribution to society. Much income, and proportionally more so among wealthy people, is not the product of effort, but rather is unearned. The state is not punishing people for their contributions to society when it taxes them in a progressive manner, but rather simply acknowledges that some people are more able to pay greater amounts, namely the wealthy, and can thus be levied from accordingly.Improve this
Progressive taxes place an unfair and disproportionate burden on the wealthy
The revenues the state acquires through taxation are used to pay for various services and benefices. Lower income individuals consume these services to a disproportionate degree. It is they who require income supplements and child benefits when they lack the wherewithal to provide for themselves, and they avail more readily than the wealthy of such things as public healthcare and transport services. There is thus clearly no correlation between the amount people pays in taxes and amount of benefits they receive from them. The rich make less use of such services, often preferring to use of privately provided services, yet they are expected to pay a greater proportion of their wealth to the public services they do not use under a progressive system of taxation. As a matter of fairness it is only just that everyone contribute to the provision of public services equally, in accordance with their wherewithal to do so. Wealthier people thus can pay more units of wealth to the system than poor people justly, but when they are expected to pay a disproportionate percentage of wealth, through a system that levies contributions according to a progressive rather than proportional scale, they are being used unfairly and being stripped of their rightful possessions to the use of others.
 Mayer, David. “Wealthy Americans Deserve Real Tax Relief”. On Principle 7(5). 1999. Available: http://www.ashbrook.org/publicat/onprin/v7n5/mayer.html
Taxation need not be proportional to be fair; individuals earning significantly higher income than others have benefited from many societal factors that allowed them to accumulate wealth in peace and safety. Such people thus owe a greater burden to the state for the greater benefits the opportunities it bestowed upon them allowed. A just system of taxation should reflect this, and a progressive system does so by levying from people in accordance with their wealth that without the state could not have existed. A study of 54 nations shows that the public preserve flattening the tax adds to the risk of wellbeing and thus prefer progressive tax as a way in order to for a better over quality of life.
 Hyde, Lucy, ‘A More Progressive Tax System Makes People Happier’, Association for Psychological Science, 6 September 2011, http://www.psychologicalscience.org/index.php/news/releases/a-more-progressive-tax-system-makes-people-happier.html
The ability to orchestrate a progressive taxation regime gives undue and dangerous power to the state
The power to tax is power to destroy. A state with power over a progressive taxation system can put the wealthy in effective thrall, and use them to benefit its own ends. This is exacerbated by such phenomena as the tyranny of the majority which can lead the majority of less wealthy and have-nots to demand more and more services and paying for them by inflicting ever more onerous taxes on the wealthy while diminishing their own burdens. Furthermore, so long as the tax burden is disproportionately leveled on the few, no one can see the growing size of the state. With flat or regressive consumption tax everyone can feel the growth of the state. They can also understand the costs associated with it, driving them to have more realistic preferences and to make more rational demands of the state rather than treating the rich as a perpetual piggy bank.
 Dorn, James. “Ending Tax Socialism”. Cato Institute. 1996. Available: http://www.cato.org/pub_display.php?pub_id=6297
A state with the ability to levy taxes will not necessarily be evil and dominating of the wealthy. People can always leave a country, so governments must always be accommodating of wealthy citizens, and can be so even within a progressive tax system. The tyranny of the majority can only persist when there are no legal protections for individual citizens and minorities, but these exist almost universally in Western states; there is no reason to think this would somehow change in the presence of progressive taxation.Improve this
Progressive systems are invariably highly complex and inefficient in implementation, breeding the knock-on inefficiencies of evasion and avoidance
The modern progressive tax system has created whole industries of firms and specialists geared toward helping people file their taxes and to ensure the system runs smoothly. It has also bred armies of officials who oversee and audit tax issues, costing the United States for example more than $11 billion a year to operate its tax collection and verification systems. People are forced under the progressive system to waste hours filling out returns, to hoard and sift through receipts to be accurate and to maximize their rebates. There is thus a huge efficiency loss in terms of people’s time as they are forced to dedicate effort and resources to the often arduous task of filing taxes in an ever more complicated system, arising from a progressive regime. The extreme complexity of the system has generated further negative incentives, encouraging the wealthy to seek ways around the system, to exploit loopholes in the bloated system for their personal benefit. The very wealthy can thus evade obligations through the manipulation of complex tax codes and loopholes, and can sometimes even lead less scrupulous people to pay less than less wealthy people. Flat and regressive consumption taxes, on the other hand, offer an easier mechanism of taxation that is easier to understand, less time consuming to deal with, and harder to manipulate.
 White, James. “Internal Revenue Service: Assessment of the 2008 Budget Request and an Update of 2007 Performance”. United States Government Accountability Office. Available: http://www.gao.gov/new.items/d07719t.pdf
 Wolk, Martin. “Why the Tax System Keeps Getting More Complex”. MSNBC. 2006. Available: http://www.msnbc.msn.com/id/12307554/ns/business-eye_on_the_economy/t/wh...
While tax codes are complicated, their sophistication is not justification for their abolition. Rather, progressive systems can be more streamlined. New Zealand can be used as an example where a progressive taxation system is also simple, it has been praised by the OSCE; in 1958 it introduced the PAYE, pay as you earn system. Where employees were taxed from their salary rather than paying their taxes in full at the end of the financial year. As Complex systems and loopholes do arise due to the piecemeal development of such taxation systems, by organizing it properly a progressive system of taxation can be every bit as easily regulated and navigated as a flat-rate system.
 Dalsgaard, Thomas, ‘The tax system in new Zealand: An appraisal and options for change’, OECD Economics Department Working Papers, No.281, 31 January 2001, http://www.oecd.org/dataoecd/29/27/1891375.pdf
The aim of taxation should be to provide equality of opportunity, not of outcome
Taxation should not be about trying to engineer a more equal society. The purpose of taxes is to furnish necessary services people need to become competitive free agents in the economy. Progressive taxes take unduly from some to give to others in the hope of fostering social equality. Yet such efforts can only be harmful, as they breed resentment from rich toward the poor for taking undue amounts of their wealth for their consumption, and feelings of entitlement from poor who feel the wealthy owe them the money they pay, and thus feel happy to levy ever more odious taxes from them. Society is best served by promoting a system of taxation that fosters equality of opportunity, by providing essential services to which everyone contributes in accordance with their ability to pay. This is better serviced through a system of flat-taxes, such as in Russia where there is a flat tax of 13%, that promote a system of proportionality in taxation, rather than progressive taxes that focus unduly upon the contributions of the few to the many.
 The Frugal Libertarian. “Immorality of Progressive Income Tax”. Nolan Chart. 2008. Available: http://www.nolanchart.com/article5208.html
 Mardell, Mark, ‘Pros and cons of Rick Perry’s flat tax plan’, BBC News, 26 October 2011, http://www.bbc.co.uk/news/world-us-canada-15468945
The state’s sole role in taxation is not merely to provide equality of opportunity, but also to foster social justice through the promotion of greater social equality. This does not mean that there should not be any inequalities between citizens, but rather it means that by limiting income disparities individuals in society have more in common and are thus more able to interact in a peaceful societal framework. Progressive taxes promote this end by reducing the incomes of the very top and using the tax revenues to improve the situation of the worst off, closing the gap between the two groups and fostering broader social interaction and cooperation.Improve this
Batra, Ravi. The Great American Deception: What Politicians Won’t Tell You About Our Economy and Your Future. New York: John Wiley and Sons. 1996.
Benabou, Roland. “Social Mobility and the Demand for Redistribution: The Poum Hypothesis”. The Quarterly Journal of Economics. 2001. Available: http://www.jstor.org/pss/2696470
Boxx, T. William and Gary Quinlivan. The Cultural Context of Economics and Politics. Lanham: University Press of America. 1994.
Dalsgaard, Thomas, ‘The tax system in new Zealand: An appraisal and options for change’, OECD Economics Department Working Papers, No.281, 31 January 2001, http://www.oecd.org/dataoecd/29/27/1891375.pdf
Dorn, James. “Ending Tax Socialism”. Cato Institute. 1996. Available: http://www.cato.org/pub_display.php?pub_id=6297
Goldsmith, Paul, ‘Taxes’, Te Ara – the Encyclopedia of New Zealand, updated 5 March 2010, http://www.teara.govt.nz/en/taxes/5/2/1
Hyde, Lucy, ‘A More Progressive Tax System Makes People Happier’, Association for Psychological Science, 6 September 2011, http://www.psychologicalscience.org/index.php/news/releases/a-more-progressive-tax-system-makes-people-happier.html
IRS, ‘Estimated Tax for 2011’, http://www.irs.gov/publications/p505/ch02.html#en_US_2011_publink1000234349
Krieger, Matthew. 2007. “Lack of Competitive Tax System Costs Foreign Investment, Study Finds”. Jerusalem Post. Available: http://pqasb.pqarchiver.com/jpost/
Lakoff, George and Bruce Budner. “Hidden Truths of Progressive Taxes”. Institute for America’s Future. 2007. Available: http://www.tompaine.com/articles/2007/04/16/hidden_truths_of_progressive_taxes.php
Mardell, Mark, ‘Pros and cons of Rick Perry’s flat tax plan’, BBC News, 26 October 2011, http://www.bbc.co.uk/news/world-us-canada-15468945
Mayer, David. “Wealthy Americans Deserve Real Tax Relief”. On Principle 7(5). 1999. Available: http://www.ashbrook.org/publicat/onprin/v7n5/mayer.html
Nozick, R. Anarchy, State and Utopia. New York: Basic Books. 1974.
Olivastro, Andrew. 2002. “Tax Cuts Increase Federal Revenues”. Heritage Foundation. Available: http://www.heritage.org/Research/Reports/2002/12/Tax-Cuts-Increase-Federal-Revenues
Seligman, Edwin. “Progressive Taxation in Theory and Practice”. Publications of the American Economic Association 9(1): 7-222. 1894.
Shapiro, Robert. “Flat Wrong: New Tax Schemes Can’t Top Old Progressive Wrongs”. Washington Post. 1996. Available: http://www.washingtonpost.com/wpsrv/politics/special/tax/stories/top032496.htm
Terkel, Amanda. “Warren Buffett: ‘I Should Be Paying a Lot More in Taxes’”. Huffington Post. 2010. Available: http://www.huffingtonpost.com/2010/11/21/warren-buffett-paying-more-taxes_n_786516.html
The Frugal Libertarian. “Immorality of Progressive Income Tax”. Nolan Chart. 2008. Available: http://www.nolanchart.com/article5208.html
Thune, Kent. “The Diminishing Marginal Utility of Wealth”. The Financial Philosopher. 2008. Available: http://www.thefinancialphilosopher.com/2008/08/the-diminishing-marginal-utility-of-wealth.html
Weisbrod, Burton. Public Interest Law: An Economic and Institutional Analysis. Berkeley: University of California Press. 1978.
White, James. “Internal Revenue Service: Assessment of the 2008 Budget Request and an Update of 2007 Performance”. United States Government Accountability Office. Available: http://www.gao.gov/new.items/d07719t.pdf
Wolk, Martin. “Why the Tax System Keeps Getting More Complex”. MSNBC. 2006. Available: http://www.msnbc.msn.com/id/12307554/ns/business-eye_on_the_economy/t/why-tax-system-keeps-getting-more-complex/
Young, H. Peyton. 1990. “Progressive Taxation and Equal Sacrifice”. The American Economic Review 80(1): 253-266.
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