If you’re looking at the title of this article and thinking, "The progressive income tax? Boh-Ring!" I can’t blame you. The progressive income tax probably seems irrelevant and abstract to most people (if they’ve even heard of it), and many people try in general to avoid thinking about taxes and politics. Maybe this article isn’t to your taste, but if the term, "tax bracket," has unpleasant associations for you, you really should read on.

The progressive income tax means that the more one earns, the more income tax one pays. Now, if you’re thinking, "Well, of course. If 25% is the rate, 25% of $200,000 is more than 25% of $40,000." you are mathematically correct, but this has little to do with the progressive income tax. The progressive income tax means that the more one earns the higher the rate at which one is taxed. Thus the rate (single payer, 2004 rates) on the first $7,150 is 10% (tax "credits" are given to low income persons that are not included in this); on earnings between $7,150 and $29,050, the rate is 15%; at the top bracket, for earnings above $319,100, the rate is 35%. I supposed that 35% paid on earnings above $319,100 may not sound that bad if you don’t earn that much. The top bracket has in the past been as high as 94% (in 1944-1945; 91% in 1951-1964; >50% in 1932-1981), and whenever you hear politicians talk about the "rich" "paying their share" or needing to "sacrifice," what is really being talked about is significantly increasing the rates for the upper tax brackets (probably plus some increases for lower brackets to avoid any big rate jumps from one bracket to the next, though the politicians won’t mention that part of the plan). The progressive income tax is in some political circles both a sacred cow and a favored tool for social engineering. Questioning having higher tax rates for the "rich" is politically risky and not socially popular.

How is the progressive income tax justified? One reason given is some form of, "The rich can afford it." or "The rich won’t miss it." Another reason that is offered goes something like, "The rich get more from society, therefore they should pay more." And some say, "The rich are selfish (or, "don’t care"), and should be forced to be more generous." Maybe one or more of these rationales will seem reasonable to some readers, but all three appeal to emotions and have little underlying substance.

All three "reasons" rely on the fact that the "rich" are few in number, and on a basic human propensity, envy. In other words, the "reasons" are addressed to the majority of people (i.e. voters), who are non-rich and most of whom do not know any "rich" person, and to their inclination to resent the "rich". For many, their envy and resentment obscures the dangerous idea underlying the arguments - that what a person earns doesn’t really belong to that person. Most rich people in the US - contrary to a popular stereotype - earned their wealth rather than inheriting it. And even inherited wealth was earned by some person whose final exercise of their right of ownership was their will (or trust). These "reasons" for the progressive income tax all have as their basis the idea that somehow it is the government that really owns what the "rich" have earned (or perhaps the government owns the people - "rich", "poor, and in between?), and thus can take whatever it chooses from the "rich". The danger in this idea is the fact that the designation "rich" is ambiguous and flexible. Ultimately, no person who earns anything or owns something can safely assume they won’t be arbitrarily designated "rich" and what they have earned and own expropriated. Similarly, there is no just basis for the government taking from citizens solely on the ground of their economic status and giving what was taken (less 75% administrative overhead) to others of the government’s choosing. Thus, the argument that the "rich" can "afford" discriminatory tax rates is a euphemistic justification for theft.

Do the "rich" really take more form society? As already pointed out, accumulated wealth is earned in some way. It may have been earned by producing a product; it may have been earned by providing a service (investing one’s money is a service, the use of one’s money). Regardless of the specifics of how the wealth was earned, the processes of earning, accumulating, and maintaining that wealth unavoidably benefitted society: through products and services society needs and wants; through the jobs created to produce those products and services; through the jobs and companies created to support the activities (business and personal) of the wealthy. The claim that the "rich" take more from society than average people is so false that the reverse may be closer to reality.

The idea that government has the arbitrary right to decide, solely based on economic class, that any person is "too selfish", "doesn’t care enough", or "should be more generous" should scare and horrify any citizen. Expropriation of money under the guise of "charity" is attempt to steal from the "rich" using a manipulative euphemism to cloak the arrogance of the outrage. If any reader takes comfort in the thought, "Well, it’s not my money they’re taking." my response is, "Yet!" As already noted, "rich" is a flexible designation. It is not government’s right to decide how much any person should give to charity, nor who the beneficiaries should be. Charity and generosity should remain voluntary and private.

One of the stranger illusions that advocates of the progressive income tax seem to hold is that the "rich" will not adjust their economic activities in the face of punitive taxes. In reality, the "rich" will tailor their financial activities and place(s) of residence to avoid or minimize their taxes. Since the "rich" are funneling their personal and financial energies into tax avoidance activities, their energies and finances are not invested in activities that maximize their income (and the consequent benefits to society). Thus, the progressive income tax actually does harm to society, whatever the intent of the social engineers who advocate it.

So, what is right or just where taxes are concerned? It’s an ancient concept that justice is blind, favoring neither rich nor poor, neither powerful nor common person. Where taxes are concerned, this would mean that "rich" and "poor" and in between are treated equally. The "rich" receive no favoritism; the "poor" receive no favoritism. Talk of "economic justice" involving government transferring wealth from economic class to another is just euphemistic demagoguery, hijacking the word "justice" to incite injustice by appealing to class envy. Economic class-ism is in some ways analogous to racism. Lest the reader think this comparison is an exaggeration, consider the economic-class-based purges that killed tens of millions of people in the former USSR, China, Cambodia, and elsewhere. In light of all this, some form of tax at a flat rate that is based on individuals’ income or expenditures would be just to "rich" and "poor" alike.

Advocates of the progressive income tax see it as a tool for re-shaping society to reflect their own socio-economic philosophy: taking wealth from the "hoarding", "selfish", "rich"; reducing the power of the "rich"; redistributing wealth more "fairly" through government administered social programs; using the wealth of the "rich" to lift the "poor" out of poverty and oppression. What noble sounding goals! Reality, however, tarnishes this idyllic image. In the process of effecting this wealth transfer, administrative bureaucracy consumes some 75% of the money allocated to the social programs. If a private charity allowed overhead to consume 75% of the funds it raised, it would be condemned publicly as a scam, and its directors would probably be hauled into court. The visionaries of government social programs don’t understand a basic aspect of human nature: if you subsidize something, you will get more of it. Social programs have the unintended effect of encouraging and enabling dependence (sometimes across multiple generations!) and irresponsible behavior. Thus, individuals’ poverty is often prolonged or perpetuated by the programs intended to help them emerge from it.

The progressive income tax has other unintended consequences. The progressive income tax discourages business investment and entrepreneurship. Investors and entrepreneurs weigh the risks (losses and business failure) and the benefits (profits and growth) of any prospective business venture. When the risks out-weigh the benefits, the investment won’t be made or the business venture won’t be attempted. The progressive income tax alters the risk-benefit balance of any prospective investment or venture by reducing the benefits of success. Since the risks remain the same, reducing the benefits will discourage many otherwise viable investments and business ventures. Investors will resort to lower risk, lower tax, investments which have less benefit to society, and fewer new businesses that produce products, offer necessary services, and employ people will be started, a loss to society.

The intent of the progressive income tax is to be part of and to enable social engineering by government, through social programs. Unfortunately, intent is, in this case, widely separated from reality . The overhead and unintended consequences of social programs out weigh any realized benefits. The progressive income tax itself doesn’t accomplish its role of transferring wealth, while its unintended (hopefully) consequence, a hostile climate for business and investment, is harmful to society. So, who does benefit from the progressive income tax? The politicians and political activists who gain and maintain power by stirring up class envy are beneficiaries of the progressive income tax. The bureaucrats who administer the social programs supposedly funded by it while soaking up some 75% of those funds also have an interest in perpetuating those programs and the progressive income tax. The progressive income tax benefits politicians, bureaucrats, and political activists while harming society, including the "poor" who are supposed to be benefitted. It’s time to admit that the progressive income tax is a harmful failure and scrap it.