Dolla, Dolla, Bill, Yeah, yeah!

Oooh; it’s that word. In this case, it has a specific meaning though.

Progressive taxes are important.

Progressive taxes are ones where the percentage you pay goes up the more resources you have to pay it with.

In the United States’ income taxes, this is done in brackets: you pay x% on the first bracket of your income, then x+y% on the next bracket and so on.

This matters, because people with higher incomes are able to pay more. You cannot, as they say, squeeze blood from a stone and you can’t squeeze a 75% income tax out of someone taking home $10k/year.

You can, however, squeeze a 75% income tax on any income over $1m/year (to take an arbitrary example). Anyone who’s already taken home $1m for the year can afford to pay 75% on the next million.

Though they’re probably not going to want to.

Progressive taxes are reasonable.

So, the higher tax brackets are where you can have higher taxes without really causing any harm to the taxpayers.

They’re also fair: people with higher incomes are usually depending much more on the services society provides in order to be taking in that much in the first place. They need civil infrastructure, police and regulatory systems and the entire architecture of modern society for that to be possible.

No one’s pulling down $1m/year all on their own.

The more you take, the more you pay.

So, the people with the highest incomes are the ones most able to pay and they’re the ones who are most dependent on society for creating and maintaining the situation that sustains them.

Seems fair.

Taxes that aren’t progressive are called regressive: these are the taxes where everyone pays the same percentage; sales and property taxes are prime examples. This looks fair, though it really isn’t.

Regressive taxes are less effective than progressive taxes, since the base rates have to be much higher to take in the same amount as a progressive tax would, and are less fair, since the people who are benefiting the least are hurting the most.

So, we should either abandon the current regressive taxes or change them so they can be levied progressively.

One thought on “Tax This: All Taxes Should Be Progressive

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