Progressive Tax Rate

667 Words Sep 11th, 2011 3 Pages
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 …show more content…
It also reduces the disparity in net pay and so lessens the economic divisions between different members of society. Progressive taxation can encourage talented workers who earn high incomes to move overseas to escape the tax system. This can create a “brain drain”. Alternatively, as the marginal benefit of extra work falls, they may be less keen to spend more time on it, negatively impacting productivity overall. Progressive taxation should increase the total tax take. This means that increased funds are available for spending on worthwhile socially beneficial programmes, such as education, health, environmental protection, etc. Progressive taxation is an inefficient way to increase the tax take. Because of resentment, increased evasion, reduced incentive to work and administrative complexities, a progressive tax rate can actually lessen rather than increase the total tax take. This is in nobody’s fiscal interest regardless of whether they favour small or large amounts of taxpayer-funded spending, since it equates to a more demanding system producing less agreeable results. Progressive taxation acts as a discouragement to overinflated wages. There is a decreasing marginal benefit to high, or higher, wages, since the earner will see less and less of the extra gross pay actually appearing in their net pay packet. Therefore, the upward pressure on pay will
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