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Progressive taxes vs progressive income taxes

The whole progressive vs regressive debate below hints at significant naivety about how taxation really works. Things that look progressive might not be progressive at all in reality, and vice versa. This article does not touch this problem at all.

For example at a superficial glance most people would say that Finland - a nordic wellfare state - has clearly progressive taxation, as its income taxes are extremely progressive. Certainly a lot more progressive than Texas (for context, I'm a Finn that has lived in Texas).

Someone who actually looks at this more than skin deep will realize that the situation is actually quite different due to the other taxes that will nearly unavoidably effect people.

1. Property tax. First of all this is quite low in Finland (actually I think it even got removed, but in any case it's very low), but more important is the way property is priced for taxation purposes. It's priced according to some pretty strange "valuator" algorithm used by the government that priced my old apartment at 23.150EUR. Of course, I did sell said apartment for 180.000 EUR, so my taxes were actually more like 1/9 of the already low tax percentage. My Nordic ass was _outraged_ at the ripping off done in the communist haven of Texas, where they tax property like mad!

2. Gas tax. Extremely high in Finland, and the rich people primarily live in the capital region with good public transportation and short distances while most of the poor people live in the eastern forests (urban perspective) with extremely long distances and multiple other things (tractors etc) that require gasoline to run.

Now if I earn 100k in both Finland and Texas and pay 35k in taxes in Finland and 40k in taxes in Texas, according to this article Finland has the more progressive tax system.

Am I the only one that finds this somewhat nonsensical? Whether a tax system is progressive or regressive should depend on how big a percentage of income is spent in taxes in _reality_. Not in a percentage of income tax, which means nothing at all if other taxes are adjusted to compensate (though most people get suckered very easily by this sleigh-of-hand). Of course this adds significant complexity since now we have to factor in wealth - in Texas I could end up paying more taxes than I even earn if I'm wealthy enough, which is virtually impossible in Finland. This complexity is completely hidden by this article, and there is no article which even breaches the topic as far as I can tell.

I realize that a lot of sites consider progressive taxation same as progressive income taxation, but that just goes to show how foolish people work even at Merriam-Webster and Britannica. —Preceding unsigned comment added by 91.152.111.207 (talk • contribs)

I don't see that Merriam-Webster or Britannica define progressive taxation the same as progressive income taxation - they don't even mention income in their definition. They define it using the "tax base" or the "quantity subject to taxation", which can be income or expenditure. I don't see where we define it in this article to strictly income taxes - I believe the lead makes it clear that it is applied to the tax base, which can be income or expenditure. I think you're touching on progressivity as an individual tax or as a tax system as a whole as well as tax incidence. A tax may be progressive, but when combined with other taxes, the tax system as a whole may be less progressive or regressive. Each tax has a level of progressivity and the tax system as a whole has a level of progressivity. I think this is touched on in the forth sentence - "It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime." Wealth can more accurately be measured, particularly in a consumption based tax, using multi-year or lifetime. Morphh ^(talk) 14:49, 29 June 2008 (UTC)

I think the difference is significant enough that we should split the two apart. The article has significant confusion still in my opinion, and is very heavily concentrated on the income tax.

For example the chapter History of Intellectual Debate starts by labeling is progressive income taxation, but the Adam Smith quote seems to clearly indicate that he is talking about the tax system as a whole. Reading that chapter without noticing that Adam Smith might not actually support progressive income taxation requires a very high level of critical reading ability. I don't see why we'd make things intentionally hard to read.

The next chapter is 100% about income taxation (and with its size and name, the reader will almost certainly now have connected the header of Tax Progression with Income Tax Progression). The other big chapter (Personal income tax brackets) is also 100% focused on the income tax progression...

I also disagree with the initial sentence to a degree, since it does shut out talking about the progressivity of a tax system by mentioning that a tax rate that increases as the amount subject to taxation increases is progressive. It gets very muddled since a tax on gas that got higher the more people refueled would be considered progressive in the strictest of senses, even if the top 1% were all driving on hydrogen cars (meaning that the tax burden would be progressive on people that couldn't afford hydrogen cars and that lived in areas of poor public transportation). Is the tax progressive? According to this page, damn right it is. I wouldn't be quite so sure though... —Preceding unsigned comment added by 91.152.111.207 (talk) 15:26, 29 June 2008 (UTC)

The most common reference and description of progressive taxation is usually around income taxes. It's easy to find examples. I think we can adjust the Adam Smith section, although I'm not sure if that changes the accuracy. I think we address quantity of consumption in the second paragraph "It can also apply to adjustment of the tax base by using tax exemptions, tax credits, or selective taxation that would create progressive distributional effects. For example,..." Being the most common example of progressive taxes, I think it is appropriate to have a section on progressive income taxation, although I do not care for the current bullet pro/con format. I would not object to a section on progressive consumption taxes. The section on the U.S. covers the topic a bit more broadly. Morphh ^(talk) 15:43, 29 June 2008 (UTC)

I think a good start of a chapter would define the field. For example for progressive taxation the split would be - as you mentioned - the common topic of progressive income taxation and the less common progressiveness of the tax system as a whole. I personally feel that the two might even deserve their own articles (lord knows you could write books about the progressiveness of tax systems as wholes), but at the very least they should be split apart very clearly with chapters. Right now it hasn't been done at all and I still can't see how people would not come out with the impression that progressive taxation = progressive income taxation from reading this article. Oh economists etc will certainly avoid this pitfall, but the millions of board warriors arguing politics on the internet almost certainly won't. The sad part is they have significant weight this day and age, and as such we should try to keep things very clear especially in politically significant articles like this one. —Preceding unsigned comment added by Ville Lehtonen (talk • contribs) 15:52, 29 June 2008 (UTC)

I don't see them as two different fields or even different topics. They are the same topic (progressive taxation) applied to different tax bases, different time-frames, and different systems. I don't have an issue describing examples of these different methods. I don't think the article implies that progressive taxation = progressive income taxation, only that progressive income taxation is a form of progressive taxation. I've adjusted some of the titles and edited some of the content to make this a little more apparent. The first step would be to add some content and a section on consumption taxation and perhaps a section on tax systems as a whole, if you have enough content. I'm open to structural changes in the article. Morphh ^(talk) 16:04, 29 June 2008 (UTC)

Looking at the pros and cons section, I think this could be moved from under the "Progressive income taxation" section but it will need some tweaking to remove some references to income. Morphh ^(talk) 16:36, 29 June 2008 (UTC)

I restructured the article so perhaps this will lend itself to some of your suggested edits. Morphh ^(talk) 16:39, 29 June 2008 (UTC)

It's definitely a lot better and a good interim version. I mean I'll start filling up that section perhaps tomorrow so we can judge where if there's sufficient content to warrant a split.

The reason I'd split the articles is that progressive income taxation has a great deal smaller context than the taxation of the whole, especially since it's so clear cut. Progressive income taxation can be defined in a paragraph which doesn't really need to get philosophical about progressive/regressive, and it's all about one type of taxation (income). To talk about progressiveness of the tax system as a whole we have a very impressive context ranging from regressive/proportional/progressive and also from all the different types of taxes (excise, income, property, sales etc). It's a completely different beast and quite frankly if properly done, it would end up being 90% of the text of this article, unless we start explaining the different progressive income taxes of all different countries (which would be huge, and might make more sense in its own article as well). —Preceding unsigned comment added by Ville Lehtonen (talk • contribs) 17:08, 29 June 2008 (UTC)

I don't know how much value the country section offers. I think I'd prefer to leave the progressive / regressive discussion of a country's tax system on the article for that country. I would prefer to remove these sections and only use a country in the context of an example when discussing a particular point or points (something that is verifiable and can be referenced). Keep in mind our policy on no original research. I only see two tax base types - income or expenditure. Each individual tax is either progressive or regressive (tax incidence sometimes debatable) and then the overall progressivity of a particular tax system or various tax systems (for example federal / state / local - combined?). Also consider the discussion of merging the progressive / regressive / proportional tax articles into one article (I think it is at the bottom of the talk), since it may effect how you consider writing and context. Morphh ^(talk) 17:35, 29 June 2008 (UTC)

Very Promising Project, but the writing is too formal

I love the approach, “Reasons for implementation,” “Arguments against implementation.” This is exactly what I want more wiki articles to do, just to lay it on the table, as clearly as we can. And I like good references as footnotes and endnotes, but perhaps not so many technical terms and ‘bluebirds.’

You can include one technical term in a sentence and a newcomer to the field might well understand it from the context. Include three technical terms and the sentence becomes a mess. And unfortunately, wikipedia encourages this as part of ‘bluebirding.’ And this is viewed as a mark of a successful article. So, we’re not really learning anything, we’re just being referred elsewhere, and if we take the bluebird, it’s likely to be the same deal there, not really learning anything, just being referred elsewhere. We have taken a tool and have way, way overdone it. As an example, look at the first argument in favor of.

“*If the utility gained from income exhibits diminishing marginal returns, as many psychologists assert (see Weber-Fechner law), then for the tax burden to be shared in a utilitarian way the tax-bill must increase non-linearly with income.”

We should mention either "Weber-Fechner" or "utilitarian," but not both. And actually, it might make for better section to mention neither. And there’s really no reason to bluebird “non-linear.” Instead we might write:

‘This first argument draws upon the fact that a hundred dollars means more to a modest-income individual than it does to a high-income individual. It’s an argument of diminishing returns, that an additional hundred dollars will do less to improve the quality of life for the high-income individual. Overlapping but distinct is the argument of fairness, that the higher-income individual can more easily pay a higher percentage.’

What I’m arguing, is that since the concepts can be slippery enough, let’s put it in plain English as much as we can. And this is not babying-down the concepts, quite the contrary. Because we are putting them in plain English, we can go further. For example, at a certain point, we can go from qualitative to quantitative. For example, what degree of progressivity is most conducive to high average quality-of-life? We can compare different countries, different economic periods, we can link these to economic growth, to percentage of people in poverty, and so on and so forth, and we can do this all much better if we keep it in plain English. (And if someone wants to include libertarian arguments, fine, include the best libertarian arguments you know.) All I ask, phase back a little, don’t show off how many technical words you know, hold back a little, let the story develop as it were, let other people participate.

On “Arguments against implementation,” the long quote by Eugen von Böhm-Bawerk is then repeated with what’s said in the first bullet (and by the way, I kind of like bullets). And because he’s a not very clear writer, you kind of need the first bullet to repeat what he has said! The argument is that out of necessity, or poor money management, or for whatever reason, poor people spend a higher percentage of their income. And rich people invest a higher percentage of their income. And investment is an engine for economic growth and should not be discouraged by increasing rates of taxation.

Compare this to the second reason for: “As income levels rise, levels of consumption tend to fall. Thus it is often argued that economic demand can be stimulated by reducing tax burden on lower incomes while raising the burden on higher incomes.” Interesting! It again becomes a question of balance, and of quantitative. How much present consumption vs. how much investment in the future? Because sometimes what the economy needs most is priming the pump and lots of people with disposable income spending on lots it of different things (I think that’s sometimes called Keynesian economics, which I freely admit I don’t understand all that well, and if someone could do a two or three paragraph description, clearly laying it out, maybe with a single ‘bluebird’ referring me to even a longer, more fully explanatory article, I would be most appreciative!). I do remember I had a 9th grade teacher who had spent some time in a poor country (I think the Phillipines) and she mentioned it really impressed on her the vital importance of having a large middle class. Her example was that even if a rich person puts a TV in every room of the house, that’s not going to make for that much of a total demand for TVs sold.

So, what is the optimum range of savings and how good a tool is the tax bracket structure in influencing it? Again, we can compare different countries and different economic periods. And again, we can take this much further if we use plain English and be sparing in the use of technical terms. FriendlyRiverOtter 20:07, 27 April 2007 (UTC)

I agree that we should try to keep the language simple (but not so simple that we're loosing relevant terms). We also have to be careful of original research with such comparisons. Morphh ^(talk) 20:38, 27 April 2007 (UTC)

Questionable interpretations

Implying that Jefferson was as much a supporter of the progressive income tax as Marx is absurd, especially given that the U.S. income tax was not created until 1913. Jefferson proposed no such tax when he was president, so it is hard to believe that he would support such a tax today, and at the very least such an implication is easily debated. Only clear supporters of the progressive income tax should be cited, such as Karl Marx. For a less radical supporter, Keynes would be the textbook choice as such tax proposals are often referred to as "Keynesian".

As for the quote from Adam Smith: "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

This does not necessarily mean he would support a progressive income tax, as under flat tax systems the wealthy still pay a disproportionate amount of the total share. I also do not think he would appreciate being associated with Karl Marx. The main point here is that questionable interpretations do not belong in such a definition as the point is to explain what a progressive tax is.

—The preceding unsigned comment was added by 68.118.218.191 (talk) 11:49, 16 January 2007 (UTC).

Consolidation

I added the automatic stabilizers advantage and the income disparity disadvantage; however, I am worried if the income disparity would violate POV despite its proof, and whether there can be some consolidation between the income disparity, work disincentive, and brain drain sections. Fephisto

Brackets and revenues

An obvious note to add that would be insightful (and also should be shown in the flat tax article) would be showing the tax brackets with an estimate of the income tax dollars generated by the government by each bracket. So does the wealthiest bracket generate 50% of US Government income tax receipts? 10%? This would illustrate the argument.

I saw some numbers from the IRS at Fox News a couple of months ago, 1% payed 30% of the government expenses, 5% payed 70%, and 50% payed less than 1%. I guess that's from all 130 million tax payers, but I'm not sure. - Jerryseinfeld 01:20, 22 Dec 2004 (UTC)

Do regressive taxes exist?

Are you sure that regressive taxes do not exist? I can think of several of them. (land transfer taxes, estate taxes). mydogategodshat 03:33, 30 Oct 2003 (UTC)

By the way, your assertion earlier that estate taxes are regressive makes no sense at all to me. In the US (excepting Bush's scheduled abolition of the estate tax in 2010), estates worth less than $1 million ($2 million for couples) pay no estate tax whatsoever, and the tax is thus strongly progressive as a fraction of both income and amount. Steven G. Johnson 08:24, 1 Nov 2003 (UTC)

Actually these numbers make it progressive in regards to wealth, not income. It would be progressive in regards to income if the estate tax rate dimminished with the level of earned income. mydogategodshat 02:46, 2 Nov 2003 (UTC)

Although it is not explicitly progressive with respect to the income of the estate beneficiary, as opposed to the amount of the estate, it's crazy to argue that in practice the incidence is not progressive with respect to income. Low-income people are not often the beneficiaries of $1 million+ estates (except in the movies). No, I don't personally have the data, but be reasonable. Steven G. Johnson

Agreed, wealth progressivity is likely strongly correlated with income progressivity, but this need not necessarily be the case. We don't want to get sloppy. mydogategodshat 02:46, 2 Nov 2003 (UTC)

Maybe on your planet, but on Earth, for any significant population size, no reasonable person would argue that the wealthy don't tend to have higher incomes than the poor. Put another way, you can claim that I don't have proof that people 1000 years ago couldn't fly, and I concede that, but the burden of evidence would be on you to prove such an extraordinary claim. (See also below) Steven G. Johnson

Yes, we both agree that this TENDENCY exists. But there are many examples of wealthy individuals have low incomes in any given period (remember the stock market crash of 2000-2002), just like there are examples of low wealth individuals that have a boost in earned income. mydogategodshat 03:48, 2 Nov 2003 (UTC)

We're not talking about individuals, we're talking about averages; don't be obtuse.

I was talking about both, general tendencies (that typically are highly correlated), and individual instances (which must be looked at in specific detail). mydogategodshat 04:41, 2 Nov 2003 (UTC)

I looked into other jurisdictions and have concluded that we cannot make any general statements about probate tax proportionality: It ranges from very wealth progressive to very wealth regressive. User:Mydogategodshat 01:45, 2 Nov 2003 (UTC)

In the jurisdiction that I am familiar with we pay $15 per thousand for the first $20,000 then $10 per thousand after that. This makes it regressive in regard to wealth. I do not have the data to determine the proportionality in regard to income. mydogategodshat 02:46, 2 Nov 2003 (UTC)

And there's no lower cutoff? Which jurisdiction is this? In most states, the estate tax is set by the credit that can be taken against the federal estate tax, and is progressive with the estate amount (from 0% for estates under $100,000 to a maximum of 16% for estates over $10 million). Again, it's extremely hard to believe that the incidence of this tax will not also be progressive with income. Steven G. Johnson

You are making the assumption that the income of the beneficiary (or the income of the deceased) will be high if the amount of wealth contained in the estate is high. That could be true, but we should not automaticly assume it to be so. mydogategodshat 02:46, 2 Nov 2003 (UTC)

Of course it need not "automatically" be true, but it's crazy to think that it's not true on average. Be reasonable. There's no serious question that the children of wealthy people do not, on average, have higher incomes than the children of poor people. Steven G. Johnson

And before you give me some kind of crap about "sloppiness", let me point out that you should know as well as I that there have been zillions of studies pointing out exactly this correlation. Google for intergenerational correlation of wealth for example. The point is that it's common knowledge, both because it's common sense and because it's been exhaustively studied. You're just being absurd in forcing me to look up such obvious points. Steven G. Johnson

You are making another very questionable assumption. Why do you assume that people leave all their money to their children. When a wealthy estate leaves money to a low income individual, the correlation between wealth progressivity and income progressivity is lost. Likewize, if a low wealth estate leaves money to a high income organization (like a church), again the correlation is lost. mydogategodshat 03:48, 2 Nov 2003 (UTC)

Of course, it's possible for an individual wealthy person to leave all their money to a random homeless person. But you can't reasonably assert that on average, people don't pass on the majority of their estates to children and close relatives (+ charities, but these aren't taxed). Who tend to be wealthy as well. I'm not going to waste any more time arguing with you, because you're just searching for absurd excuses. A reasonable person would simply concede that the average incidence of estate taxes, as they are implemented in most of the US, is progressive with income. Steven G. Johnson 04:03, 2 Nov 2003 (UTC)

You have made a third assumption, that my example is from the US; And a forth assumption, that I do not agree that the average incidence of US estate taxes is progressive in regards to income. My statement was that the US data you gave indicates wealth progressivity. If you want to prove income regressivity, you would need more data than you provided. This involves looking into the details. mydogategodshat 04:41, 2 Nov 2003 (UTC)

Progressivity v. Regressivity

This article is fundamentally flawed because it misrepresents the nature of progressivity. A tax is progressive if the marginal tax rate is greater than the average tax rate. A tax is regressive if the marginal tax rate is less than the average tax rate. The question of who bares the burdon of the tax is refered to as the incidence of the tax. The incidence of the tax is equivelant to the progressivity of the tax only in the unique case of income taxes. mydogategodshat 07:53, 30 Oct 2003 (UTC)

I suggest either we rename this article [[progressive income tax] and indicate that it does not apply to other types of tax, or we start this article with a section on progressivity in general then add the existing article as a section on income tax progressivity. mydogategodshat 17:28, 30 Oct 2003 (UTC)

If you search on Google for "regressive tax", every single one of the top-10 links defines it in the same way as the current Wikipedia article. Half of these links explicitly give the example of a sales tax as a regressive tax. Similarly, if you search for "progressive tax", 7 of the top-10 links define it in the same way as the current Wikipedia article (of the remaining 3, 2 do not define it at all, and 1 is a broken link). I'm going to remove the "disputed" header unless you can provide some shred of evidence that there is an error. Steven G. Johnson 19:29, 30 Oct 2003 (UTC)

Furthermore, according to the www.amosweb.com economic glossary, tax incidence describes who actually pays a tax, as opposed to who is officially being taxed: e.g. sales taxes officially apply to the merchant, but the merchant passes them along to the consumer. The term can indicate a lot more information than just the progressivity (or a lot less). (By the way, "burden" is spelled with an "e", and it's "bear" not "bare", and ... oh, just get a spellchecker.) Steven G. Johnson

We are getting sloppy. I guess this will have to do. Not too many people will be using Wikipedia for serious public finance research. mydogategodshat 02:20, 31 Oct 2003 (UTC)

In other words, you don't have a shred of evidence. I'll remove the disputed notice. Steven G. Johnson

Progressivity, proportionality, and regressivity are ways of categorizing a mathematical relationship. They describe the change in the tax rate as the base amount varies. The relationship is progressive if the marginal tax rate is greater than the average tax rate. The relationship is regressive if the marginal tax rate is less than the average tax rate. So if the income tax rate (as a percentage) increases as the base amount (ie: taxable income) increases, then the tax is progressive. Up to this point I think we both agree.

The controversy arises when we start applying these principles to other taxes. This is because in addition to the simple proportionality calculations we also tend to create cross calculations. Take for example the case of an excise tax: In addition to the simple proportionality calculation (does the rate increase or decrease as the base amount of taxable wealth varies), we also might want to know how varying the base amount will influence the incidence of the tax with regard to income, age, wealth, personal/corporate, etc. I have looked at three Public Finance textbooks that I have on my shelf (Musgrave & Musgrave; D. Hyman; and O Eckstein) and they are inconsistent with their naming conventions. Sometimes they reserve the terms proportionality, progressivity and regressivity for simple proportionality calculations and do not use them for cross calculations. Sometimes cross calculations are given specific names like “income progressivity” or “age progressivity”. Sometimes they used “incidence terminology” (for example “at the margin, the incidence of dividend tax falls on . . .”). mydogategodshat 06:55, 1 Nov 2003 (UTC)

Okay, so in the specific context of, e.g., an age-incidence analysis, calling a tax progressive can refer to e.g. increasing rates with age and not income. It's may be worthwhile noting this in the article (and of course, "progressive" is a normal English word that can be used in lots of ways), but you have to admit that it's the exception. Outside of technical literature especially, the terms progressive tax and regressive tax, by themselves, refer universally, as far as I can tell, to progressivity of the incidence as a fraction of income. Furthermore, this is even the case with the technical literature that I can find: I did a search for "progressive" in the National Bureau of Economic Research Working Papers (NBER) database, and all taxation-related references that I could find (I got tired after skimming a dozen papers) were either explicitly for income tax or (in four cases) referred to progressivity of incidence as a fraction of income. Even more significantly, they did not take any pains to explain what they meant: they simply assumed you understood it to mean income incidence when they called (in one example) cigarette taxes "regressive" (I had to verify this interpretation by close reading of the context). It is indisputable, in any case, that the previous Wikipedia entry was highly misleading, because it failed to capture the most common popular use of the term (it called sales tax a flat tax, for example). Steven G. Johnson

The best definition is as mydog listed... For any tax to be appropriately classified, the base used to calculate must be what is taxed, plain and simple. Classifying a sales tax, duty, custom, etc. in relation to an income base is obviously going to likely show the tax to be regressive when it's really not the case. The classification base for an income tax should be income. As such, it follows that the classification base for a sales tax is the aggregate amount of how much money has been spent per unit time (typically one year). An estate/inheritance/death/whatever tax is most appropriately based on what rate is charged on the valuation of the estate. I could go on and on. Classifying taxes in relation to income is going to give you a lot of false answers. You have to classify it in comparison to the activity or thing being taxed. Foofighter20x (talk) 08:20, 23 June 2008 (UTC)

Neoliberality?

"Tax systems have to balance the need for income to pay for government services with the problem that too much taxation represses the economy as a whole, although the exact nature of this relationship is hotly debated."

A true fact in neoliberal economic theory, not true in many other theories. BL 05:43, 31 Oct 2003 (UTC)

How is it "neoliberal" to suggest that spending requires income? Or are you suggesting that governments can (or do?) provide no services? In that case, the needed income is ~0, and the above statement is still true. Of course, tax systems can be out of balance; is that what you object to? It's not like the statement said anything about what the appropriate level of services should be (which, of course, is quite controversial), or whether the services desired are being purchased as efficiently as possible. Steven G. Johnson 05:57, 31 Oct 2003 (UTC)

Anyway, I've left it out because discussion of taxation levels as a whole is really independent of progressivity. Steven G. Johnson

Personal Income Tax Brackets?

Where did they go? - Jerryseinfeld 20:22, 7 Nov 2004 (UTC)

Dunno. They're back now, anyway. Ellsworth 23:17, 10 Dec 2004 (UTC)

That new 'Wealth And Taxes' image seems a bit overly political in its message, and doesn't really contribute to any points being made in the section. The chart has more to do with comparing the effects of presidential policies on taxation of the wealthy than it does on personal income tax brackets. The originating article (non-WSJ copy, for those without a subscription) also sounds quite left-versus-right in tone. It's interesting, but I think it's also out of place here and should be removed; I'd like more of a consensus than my single opinion, however. - Fishbert 07:39, 12 December 2006 (UTC)

I added the image but was looking more at the table below the presidential bar chart which shows amount paid as a percentage of taxes and then the amount of income earned from that same group. The thought in adding the chart was to show the progressive tax system as it shows tax incidence is disproportionately shifted to those with higher incomes (Top 0.1% earning 9.1% of income but paying 17.4% of all taxes - Bottom 50% paying 3.3% of all taxes). I expect the WSJ is the original and the link you provided is a copy with the left vs right tone of the article being irrelevant IMHO. The image is what it is. If I could find the original source from the Treasury Department, that might be better with less opinion tied to it as a source (though we have not included such opinion with reference to it). I'm fine with the image being removed as I think the entire United States section should be condensed into a summary style that references "Income tax in the United States". This article now contains this data (which I think is more appropriate), so for non-duplication sake - we should condense this section and refer to the other article. However, if we're going to keep the section as is... I think it is a valid image for illustrating progressivity in the U.S. - though perhaps it could be cropped to remove the history if you think it is POV. Either way.. I'm not tied to it - I just thought it was relevant and may work with the article. Morphh ^(talk) 14:24, 12 December 2006 (UTC)

The original source of the data is the DoT/IRS, but I suspect the image itself was authored by the Wall Street Journal as an illustration of that data presented in a manner which supports the claims made in the original article (I don't have a WSJ subscription, so I can't compare the original to the copy I linked to, so please correct me if they are not the same text). My stance is that the image by itself conveys political opinion, and my mention of the subject of the originating article was merely to show a consistency between the two (if there was no consistency, it would have been fair to say I was reading too much in to the image). Your reasoning for adding the image, "to show the progressive tax system as it shows tax incidence is disproportionately shifted to those with higher incomes," does seem more in keeping with the lower half of the image, but even then I'd argue that perhaps the image (and the thought behind adding it) may fit better in section 3, Arguments against implementation. - Fishbert 19:28, 12 December 2006 (UTC)

I tend to agree that the section should be condensed and reference "Income tax in the United States". When I edited the brackets in that article, I had no idea the information was duplicated here until you copied over the changes. I've been playing along with the status quo, but I honestly don't see any reason to maintain two copies of the same. I would change this myself, but it'll have to wait for later -- I've already devoted too much time to this discussion section while at work. =) - Fishbert 19:36, 12 December 2006 (UTC)

Ok.. I've made an attempt at this... However, my browser crashed just as I was about save... go figure. So, I think this version is a little less then my first. But anyway... enough for today. Morphh ^(talk) 03:31, 13 December 2006 (UTC)

Introduction

A progressive tax, graduated tax, or fair tax

Why not? That's not POV, that's what I call it.--Jerryseinfeld 00:59, 8 Jan 2005 (UTC)

And right-wing people call it something else. Progressive and graduated tax is what many people call it. Fair (and unfair for regressive) tax is only what a few people call it. I gave some thought before reverting because I heard the "unfair" moniker to describe regressive tax, but the fair and unfair terms aren't used in economics (unless you're talking... extreme economics), and only received one or three google hits. --Deathphoenix 05:35, 8 Jan 2005 (UTC)

Actually, I was thinking of a "flat tax", but that's obviously not this article. I'm beinning to pick up the George Bush "freudian slip" or whatever it's called. What I meant was that it would be pretty funny to introduce flat tax, with, "a flat', simple, effective, and fair tax".--Jerryseinfeld 20:05, 12 Jan 2005 (UTC)

Oh, I see. I wonder if there's a term for a George Bush freudian slip. Maybe it's called a "Dubya slip", or perhaps Dubya speak. --Deathphoenix 19:14, 13 Jan 2005 (UTC)

The Introduction now says" "...as they shift the incidence *>disproportionately<* to those with a higher ability-to-pay." The word disproportionately in the intro is judgmental and inaccurate. A flat rate incometax is often cited as a not progressive tax, even though the income tax increases with income. And it is not clear if progressive Income-taxes are above or below ones "ability to pay." I'm recommend replacing - disproportionate with "increasingly" in the intro without evaluating wether the increase in tax rate is greater or less then ones' "ability to pay" as income increases. —Preceding unsigned comment added by 24.168.57.205 (talk) 20:54, 1 March 2009 (UTC)

Europe

Since I'm predicting that some communist pharisee will remove this I'll place it here to.--Jerryseinfeld 20:24, 12 Jan 2005 (UTC)

To receive 191,720 kronor ($27,000) for a years work, the tax cost for the firm is 247% of that, 473,280 kronor (including the "social security" tax of 33% on top of the 62% of income tax). To emphasise, for every $1 the working person claim as income, the government claim an income of $2.47. This is because of the belief in all western european countries except the Republic of Ireland that humans are random protoplasm that belong to the state. That humans are not created with ability, aptitude, competence, talent, ingenuity, comprehension, sense, and reason to self decide what to spend their money on.

Well, if it had that Ayn Rand crap pulled out of it, I wouldn't have deleted it. But feel free to rant as much as you want on the talk page. grendel|khan 08:25, 2005 Jan 14 (UTC)

Ayn Rand, really? What did she say?--Jerryseinfeld 19:12, 14 Jan 2005 (UTC)

Not in the sense of a direct quote---it's something I feel would go along with her "man as a heroic being" idea, combined with her perception of taxation as morally equivalent to slavery. grendel|khan 00:56, 2005 Jan 15 (UTC)

I tried to calculate the government claim on a $27,000 after tax annual income, is this correct that it's 30% in the US and as much as 250% in Europe? What a bunch of losers.--Jerryseinfeld 15:51, 21 Jan 2005 (UTC)

Note: I changed "after tax income" to "after-tax income" in both of your examples, as I believe "after-tax" is a compound (or hyphenated) adjective that modifies the "income" noun. However, feel free to revert if it is commonly referred to without the hyphen in accounting texts. --Deathphoenix 05:31, 30 Jan 2005 (UTC)

I am sorry but this calculations seems to be seriously flawed. I am not an Tax expert (so I won't correct it) but if you get a result of 30% in the US you should get one of 50% or 60% in Sweden but not meep 270 meep. And a comment on "citizens get a whole lot more from the swedish state than form the US state" comment would be good as well. And also don't confuse Taxes, Rents and Healthcare. --Ulrich 11:57, 28 Apr 2005 (UTC)

Yes the swedish example is wrong in several ways; some of the calcualtions are wrong and swedish "social security" tax is not 33 %. And why 190 000 kr after tax? Very few people in Sweden earn that much. The whole example seems to be non-NOPV 23:13, 18 May 2005 (UTC)

I read on Sweden's tax site that the median income is around 250,000 kr. Therefore, 190,000 kr after taxes should be a reasonable number, especially since they are examples to illustrate progressive tax structures. Given that the income is the same for all the examples, it would be difficult to lower it any more, because the amount is already slightly less than the median income in the United States (http://pubdb3.census.gov/macro/032004/perinc/new03_001.htm). Would a more fair example compare percentiles within each country as opposed to a constant amount? Such as giving an example for a person earning in the 10, 25, and 50th percentiles?

If the median is 250 000 kr before, then you should not use 190 000 kr after taxes (since 250 000 kr before taxes don't implies 190 000 kr after taxes). And since the "social security" tax, as I said, is lower than 33 %, I am deleting the example. If someone can make a correct one, feel free to do so.

Massive quotation

A large slab of Austrian school economics seems to have been quoted verbatim in the "arguments against" section. I'm not sure that this is the best policy, as this page is probably too short to give an equal hearing to every thinker on the subject over the past 120 years. Should this not be paraphrased?

If it is not possible to reduce the size of the quotation, It is probably best to give it quote marks to ensure that it is clear what the source is.

I would have contacted the user who added this block directly, but unfortunately their user page is red.

Any thoughts?

Wragge 03:42, 2005 Jun 7 (UTC)

By the way, I have added a few footnotes, and this earlier modification removed the citation without removing the note itself, so I've had to add that part back in (although it is now in the correct section). Please be aware of footnotes when deleting text.

It would be nice to replace the giant quotation block and blocks of text with bullets, like we have now for the arguments for the income tax. Here is my first stab at making the bullets, based upon my limited understanding of the arguments:

• • Progressive Income Taxes reduce investing. Due to the same diminishing marginal returns cited as an argument for the income tax, the wealthy are more likely to invest a larger portion of their income. Due to the fact that investment generally results in productivity gains, a decrease in investment would cause real wage growth to stagnate or even decrease.
  • Progressive Income Taxes are a disincentive to work. By forcing high earners to pay more tax, it is encouraging those same works to stop working. This feeds back into the first argument, as that the wealth held by the rich would decrease. The disincentive to work has been backed by econometric studies.
  • Progressive Income Taxes may encourage emigration because taxes are not internationally harmonized, so very high earners are sometimes able to use relocation in order to pay less tax

Would fairness be another potential argument? Something along the lines that while the top 5% in income in most countires pay over half the taxes (http://www.irs.gov/taxstats/indtaxstats/article/0,,id=129270,00.html for the United States which according to some sources is not very progressive), theoretically, they only have 5% of the vote to influence how it is spent.--Techieman 05:04, 7 Jun 2005 (UTC)

I think that this would be a clear way of breaking down the arguments, in a way that allows extensions in future. Many small arguments seem to be more maintainable with multiple editors than a single dense argument, however well expressed. It is probably easier for the lay-reader to get to grips with as well. As for the arguments above, I think they are are all credible and that they should be given. I especially like the last argument (which hasn't been given in any form at the moment). After all, this is the other side of the inequity aversion driving high progressive taxes. If "fairness" is to be given as a pro-progressive argument it should also be advanced against progressivity shouldn't it?

Actually, this is such a good point, that I'm going to put it onto the main page now. Remember to be bold in making updates, even if footnotes are accidentally lost, that's not a big problem.

Thanks for reading - Wragge 21:30, 2005 Jun 7 (UTC)

I apologize for creating the impression that that block of text was a direct quote. It is a paraphrase--perhaps not a very good one. The text is my distillation of a 200+ page book. Unfortunately, I have never encountered a good translation and the book is very dense. Anyways, von Bohm-Bawerk deserves the credit for the ideas. And calling it the classical argument deserves some qualification--I'm sure von Mises for instance has an alternative. I will examine my copy of his work on socialism to see if he has a cleaner articulation. --Pearlg 06:42, 7 Jun 2005 (UTC)

Sorry, Pearlg, I haven't read any complete books on economics pre-1930, so I was just guessing that this was a quote based on the formatting. By the way, why do you have a red user page? Don't you want people to contact you?

Another question

Since you (Pearlg) seem to be a serious Austrian I wonder if you can answer an off-topic question that has been puzzling me: Is it a paradox that Austrian economists volunteer their time to contribute to Wikipedia, when their credo is based around the impossibility of achieving anything without money prices? I'm sure that the Mises institute has a good answer, but do you have any thoughts?

Thanks for the prompt replies, Wragge 21:19, 2005 Jun 7 (UTC)

Sounds like you are confusing the Austrian school with Ayn Rand's horrible philosophy... but more seriously: I think if you perceive a contradiction you've been reading a gross misrepresentation of Mises's argument. First, you have to understand what money is (to Mises) and to do so you should read his Theory of Money and Credit. I'll summarize and say: no one wants to hold money. Money exists only because of uncertainty in our desires. For example, I don't know what I'll want for dinner so I'd prefer to be paid money rather arrange fixed contracts where I agree to work in exchange for another specific good. (Money is money because it is a commodity that is 1) worthless in itself 2) fungible 3) durable) Okay, so please discard the word money from your question. Prices are a relative value of goods, like a cow is worth two pigs. Prices communicate information about what people in the aggregate feel the relative value of goods is. (as opposed to say how I particularly feel about cows versus pigs because I don't like beef). This information tells me that if I am able to breed cows or pigs but I really want corn, how many cows or pigs should I breed to get the corn that I want. Without prices, I cannot know this because I have only my own judgement of their relative worth.

[Fair enough - I shouldn't have said "money prices", but prices - Wragge 02:27, 2005 Jun 8 (UTC)]

So, the point of the calculation problem is not that services cannot be performed without prices and the exchange of money. My decision to contribute to wikipedia happens to depend only on my person sense of what contributing to wikipedia is worth to me versus other activities I could be doing. I'd run into a problem though if what I really wanted was pear trees and I had a vague idea that someone would give me pear trees in exchange for posting on wikipedia. How can I make a decision in that context? I can't. I might overproduce wikitext and get fewer pear trees than I wanted. Maybe I should have been writing papers instead...

[I may have created a straw man who contends that nothing can be achieved without a price system - leisure activities do not require prices, of course. - Wragge 02:27, 2005 Jun 8 (UTC)]

As a side note, I'd say that the calculation problem is not the credo of Austrian economics but a derivative result and the school is not entirely monolithic... The Austrian school is more easily characterized by the belief that economists were being led astray by the use of improper mathematical models that implied too many fictitious behaviors. They and, Mises in particular, tried to reason about economics using only a few very simple monotonicity assumptions that could be easily verified in historic records.

[I must admit, I had thought that all Austrian school thinkers followed praxeology and couldn't care less what the historical record said. Perhaps I have been lead astray by relying on second-hand interpretations rather than digging into serious books. - Wragge 02:27, 2005 Jun 8 (UTC)]

I don't know that was Austrian per se. It is certainly von Mises, but it is wrong to say praxeology means he doesn't care about the historical record. It means that he depends on having an argument for believing in the trend and tries to _rely_ on a s few trends as possible. An interesting example: consider a plot of inverse money velocity versus interest rates. On a small time scale (say 10 years) the plot of 1/v versus i slopes one way. But if you examine averages for various decades the plot appears to slope the other way. The reason for this is other factors are driving the bias the plot over a long time scale. So, it would be a mistake to conclude that 1/v and i have the relationship that _seems_ to appear on the long-time scale. Unless you can reason about why the plot may go one way or the other, the data is misleading. --Pearlg 06:44, 8 Jun 2005 (UTC)

I assume your remark about not reading economics books before the 1930s reflects your idea that Keynes revolutionized the field. That is a bunch of exaggerated politics. *at best* keynes effectively attacked the Cambridge school in which he was brought-up--but the Cambridge school was already very much discredited before Keynes came along. Saying that he refuted classical economics, as many do, is a sort of ridiculous abridgement because classical economics in no way refers to a particularly coherent regime of economic thought. See The Failure of the New Economics by Hazlitt to get an alternative perspective of how Keynesian doctrine fits into the evolution of economics.

I should look into making a user page. Thanks for mentioning that. p.s., I am not a serious Austrian but I have recently been reviewing their work. --Pearlg 23:48, 7 Jun 2005 (UTC)

Thanks for a thoughtful answer. By the way, the real reason I haven't read anything before Bertil Ohlin is that its very hard going, and I'm lazy. I noticed that Mises.org had a special offer on some of their books today - I thought about buying them - but I haven't done it yet.

Regards, Wragge 02:27, 2005 Jun 8 (UTC)

Econometric studies

I looked at all the econometric evidence regarding high tax rates and work incentive in my EcoTax class and the general conclusion (from studies among people who are able to choose their hours of work) is that the income and substitution effects essentially cancel each other out for no net effect. Unless someone substantiates the disincentive claim I'm going to delete it. Psychobabble 03:39, 8 Jun 2005 (UTC)

You may say that current evidence suggests that in the specific societies studied at particular time periods (give citations) "such and such" It would be improper to say that those econometric studies dismiss the theoretical argument because I'm nearly certain that it is not possible to scientifically conduct an experiment which would let you make that assertion at a reasonable statistical confidence level to discredit the theoretical argument. I will of course review the citations you post to see if they've done something I haven't thought of... please see for your own reference Hasty generalization, Ecological_fallacy (especially), and Dicto simpliciter --Pearlg 06:33, 8 Jun 2005 (UTC)

Improve, rather than delete

This is an excellent example of why a hasty generalization is better than "no comment": it puts the subject in play, even when the assertion is false. Before I added the mention of econometrics the only mention of disincentives was the assertion that "progressive taxes may be a disincentive to work harder" - which is the folk wisdom in much of the discourse. I suggest that the solid econometric research in the field by quoted to provide some context and evidence for holding one view or the other. I appreciate that von Mises might prefer reasoning without time-limited evidence (see preceding question) however - most readers would like much as much real evidence as possible (I have a fondness for broad generalizations.)

Wragge 09:58, 2005 Jun 8 (UTC)

In case I wasn't clear, I do feel that it should be mentioned what current econometric studies say. It just is not appropriate to consider them conclusive. Very few arguments are conclusive and there are good reasons to particular doubt econometric studies---which I might mentioned are the study of fictious aggregates. See the very good article by Dr. VI Arnold: [1] particularly relevant is the point beginning:

At this point a special technique has been developed in mathematics. This technique, when applied to the real world, is sometimes useful, but can sometimes also lead to self-deception. This technique is called modelling. When constructing a model, the following idealisation is made: certain facts which are only known with a certain degree of probability or with a certain degree of accuracy, are considered to be "absolutely" correct and are accepted as "axioms". The sense of this "absoluteness" lies precisely in the fact that we allow ourselves to use these "facts" according to the rules of formal logic, in the process declaring as "theorems" all that we can derive from them.

--Pearlg 19:34, 8 Jun 2005 (UTC)

You're right, your weasely characterisation is better than me simply deleting it. I am familiar with the theory of modelling, I studied economics for 3 years and I did a HET class in which I studied a lot of the debates over this sort of thing in the late 19th and early 20th century. I'm afraid I've thrown my EcoTax notes out, but they did include an extensive literature survey and there were about 2 or 3 studies which each showed either a +ve or a -ve effect, but the majority (about 5 good ones, iirc) showed that the income and substitution effects cancelled each others out, which is also a plausible theoretical hypothesis. I might write in somehting about the income effect as it is generally ignored in common discourse. Psychobabble 22:59, 8 Jun 2005 (UTC)

comprehensive tax

what is this? is it the opposite of progressive tax? i cant find comprhensive tax on wiki. and somebody should put this on List of economics topics. dont have time right now. --Jaysscholar 07:25, 8 November 2005 (UTC)

i hate it when you type something on a wiki talk page, and noone responds --Jaysscholar 19:59, 20 November 2005 (UTC)

More balance

Currently, the section summarizing the arguments against tax progressivity is about three times as long as the section summarizing the arguments in its favor. This does not reflect the actual balance of opinions regarding progressive taxation, and it should be adjusted so as to not violate NPOV. Firebug 05:52, 5 December 2005 (UTC)

The fact that one side's argument is longer than the other side's is not a violation of NPOV. What does it matter which is longer? Sometimes a more pursuasive argument can be made in one sentence than with a whole paragraph. RJII 06:07, 5 December 2005 (UTC)

Removed section

I removed this section because it has incomprehensible punctuation and grammar, not to mention going against the obvious mathematical and emperical fact that progressive taxes grow the middle class, while regresive taxes shrink it.

Whoever "you" are (please sign your talk edits), I must disagree with you. It is not "obvious", either mathematically or empirically, that progressive taxes "grow the middle class" or that regressive taxes "shrink it." In fact, it is much contested. See Byrnne, Donna M., Progressive Taxation Revisited, 37 Ariz. L. Rev. 739 (Fall 1995). My personal guess is that the details of a tax scheme would likely matter more in this respect than whether it was generally progressive or regressive. Moreover, if a progressive taxation scheme reduced allocative or dynamic efficiency sufficiently (as it may or may not do), the income-reducing effects may very well outweigh the effects of redistributing the tax burden. If you research and then cite your sources, you will not make this mistake. Your removal of the section below, however, was still appropriate. It appears that the section did not cite its sources and was probably original research. Danculley 02:03, 16 January 2007 (UTC)

Progressive taxes increase income disparity

Assuming that the labor market is split between high-income workers and low-income workers because of differences such as education, and other amenities, opponents of a progressive tax argue applying a progressive tax will have the following sequence of event on the high-income market:<

1. On the individual level high-income workers' costs increase
2. Because of the loss of profit there is an incentive to leave the high-income market
3. Supply of high-income workers decreases
4. Because of demand's inverse relationship between quantity and price the result is a higher price for the fewer high-income workers.

And the following effect on the low-income market:

1. On the individual level low-income workers' costs decrease
2. Because of the rise in profit there is an incentive to enter the low-income market
3. Supply of low-income workers increases
   
4. Because of demand's inverse relationship between quantity and price the result is a lower price for more low-income workers.

Therefore the end result is fewer higher-income workers and more lower-income workers which increases income disparity. However, the argument rests upon the concept that progressive taxes will create an incentive strong enough to leave and respective the high-income and low-income markets respectively. It thus has to overpower the perceived benefit as argued by proponents of allowing low-income workers to gain entry into the high-income market, an incentive in itself.

---

The incentive in that higher incomes with lower-than 100% marginal tax rates implies the access to more consumer goodies is even more powerful.

The only reason to enter a "low income" job is that the high-income jobs either have barriers to entry (typically, educational requirements), are perceived as more stressful or otherwise undesirable (as in exposure to hazards or such unpleasant conditions as very long hours of employment) , or that the worker no longer is capable of doing the job. A circus performer crippled from a trapeze accident will likely enter a lower-paying field of work if remaining in the work force.

Higher income is itself an incentive to enter the higher-paid part of the work force, so long as the higher income isn't associated with higher costs of living (example: New York City versus almost anywhere else in the US). Even for the development of skills, one can state that if the government (usually a high-tax country) subsidizes the education that prepares a highly-talented person for a career in medicine or law, the perquisites of the work form a strong incentive to take such a career choice. Grossly-inequitable distribution of resources for self-development, especially education, and unequal access to capital markets likely do more to increase economic disparities.

The incentives remain strong to do more work and pay more taxes -- until the marginal rate reaches a ridiculous level. Like 90%.

Note well that in the United States of America since 1970, economic disparities (shown in Gini coefficients) have increased as highest tax brackets have enjoyed reductions in taxes. This corresponds with huge increases in corporate welfare more likely to serve high-income persons than low. Furthermore, were such a conclusion true, then one would find the greatest disparities of income in places of the highest taxes. Such is not so; most countries in the EU have far more equitable distributions of income than does the United States as of 2008.--Paul from Michigan (talk) 07:46, 9 January 2008 (UTC)

A brief history of U.S. Federal income tax rates and brackets

One way to define progressivity is to say that the number of income brackets is relatively large, and that the rates applied to each income bracket increase as income increases. Here is a partial history of changes in the U.S. Federal income tax rates (and the income brackets) since 1979:

Year 1979: 15 income brackets; rates ranged from 14%-70%

1982: 12 brackets; 12%-50%

1987: 5 brackets; 11%-38.5%

1988: 3 brackets; 15%-33%

1991: 3 brackets; 15%-31%

1993: 5 brackets; 15%-39.6%

2001: 5 brackets; 15%-39.1%

2002: 6 brackets; 10%-38.6%

2003-2005: 6 brackets; 10%-35%

Source: Internal Revenue Service, Instructions for Form 1040 (for each year listed)

For what it’s worth, I believe the highest marginal tax rate in the early 1950s was above 90%.

Yours, Famspear 16:05, 13 April 2006 (UTC)

Post-script: I have now added these data items to the article itself. Yours, Famspear 19:25, 13 April 2006 (UTC)

Another post-script: I have added a chart showing the rates imposed on a single individual by the 1954 Code to the article on the Internal Revenue Code of 1954, with a link from this article. The highest tax rate in the 1954 Code (for single individuals) was 91%. Yours, Famspear 22:34, 19 April 2006 (UTC)

Contradictions in interpreting early liberal thinkers

I am removing this section. First of all it makes no real sense. Second it seems more like an attempt at original research than anything else. Remember that interpretations also need sources, otherwise they are considered original research MartinDK 18:53, 9 November 2006 (UTC)

United States: Example of a tax computation

- This is wrong. Taxes aren't taken on gross income; they're taken on taxable income, which is (loosely) gross income minus deductions and exemptions. Those deductions and exemptions basically ALWAYS reduce the taxable portion of income by more than $8000. If this were a single filer, the example of $30,000 of gross income would yield at least a standard deduction of $5000 and a personal exemption of $3200. (Spouses and dependents would decrease taxable income even further.) That would take taxable income down to $21,800. Then the first $7300 of THAT would be taxed at 10%, and so forth. If the example is meant to demonstrate the 25% rate, it needs to be changed, because no $30,000 earner would hit that rate with the aforementioned deductions. - Also, this also seriously changes the % taxed. For a $30k gross income, $2905 would be paid in income taxes ($7300 at 10%, $14,500 at 15%), for just a 7.25% average rate -- far less than the 13.88% calculated here. - Posted by IP 216.86.210.26 in the article - moved to talk

POV

The pro-progressive tax section lists absolutely NO arguments against it. However, the anti-progressive section is full of counter-arguments. This article reads like a paper with a thesis of progressive tax = good. —The preceding unsigned comment was added by 68.34.98.202 (talk • contribs) 05:57, 3 December 2006 (UTC).

I reworded the intro - probably need to add a second or third paragraph that summarizes the article. Would be nice to get a graph of a progressive rate. We should also add something on progressive consumption taxes (using rebates)[2] and attempts to make sales taxes progressive (exempting nessesities and increased tax rates on discretionary and luxury goods).[3] Morphh ^(talk) 02:13, 4 December 2006 (UTC)

I have to challenge the presupposition that Progressive tax is fair. Furthermore, I would contest the neutrality of the whole article. Rather, I think it was created to support (rather than describe) the Progressive tax. I think it's fine to have an opinion, but an article describing something should be more balanced.--Andystats 20:26, 10 July 2007 (UTC)

Bullets

There are too many bullets on this article. We should try to decrease the bullets in the sections "Reasons to implement progressive tax" and "Arguments against implementation of a progressive tax" and turn these into paragraphs. Morphh ^(talk) 14:30, 4 December 2006 (UTC)

Income tax brackets

The United States section should be condensed into a summary style that references "Income tax in the United States". This article now contains this data (which I think is more appropriate) so for non-duplication sake - we should condense this section and refer to the other article. Morphh ^(talk) 14:34, 5 December 2006 (UTC)

Defense, foreign "aid", "black ops"

Those who have the most stake in the system have the greatest responsibility to save the system. Foreign investments entail risks that colonial and neo-colonial powers protect through military expenditures to defend those investments from expropriation by rival powers and from radical regimes that might compromise the power of the investor. American non-investors had far less to lose from Jacobo Arbenz' effort to reform Guatemalan agriculture by stripping the United Fruit Company of its near-feudal control of the economy than did owners of United Fruit Company, which had an effective monopoly control on farmland and a near-monopsony on labor. Bananas might have been more expensive to American consumers had Arbenz been able to carry out his reforms, but the profits for United Fruit Company would surely have shrunk. Because bananas were a luxury item in the 1950s, the increased cost would have fallen largely on middle-to-upper-income Americans. Even more blatant would have been outright expropriation of American assets, as happened in Cuba and that Fidel Castro promoted through his support of Marxist revolutions in Latin America that, had they succeeded, would have cost American investors (largely the American rich) more than non-investors.

Much of the foreign aid implies arrangements in which the recipients are obliged to buy goods and services from the donor country... often from entities tied to the government of the donor country -- or infrastructure that better serves to promote trade by the donor country's investors (roads better suited to taking the products of plantations and mines to ports instead of serving domestic interests, power plants that better serve American investments than the public in general).

Defense of foreign assets is done by the military, secret agencies, and (often) local puppets -- and enforcement of the terms of trade is often harsh. Such defense is appropriately paid for by those who stand to benefit most. That implies taxes that fall more heavily upon those who stand most to gain from the maintenance of colonial rule and neo-colonial ism.

Paul from Michigan (talk) 12:48, 10 December 2007 (UTC)

That's all fine and good, but now you will have to look for a place to publish that op-ed piece ;-) Please do mind WP guidelines. Thank you, Signature^brendel 22:52, 9 January 2008 (UTC)

Userbox

This user wants to tax the rich to provide health care, education and welfare for everyone._†$ £
¥ €

Definition

There has been some dispute over the definition regarding the measurement for a regressive tax, which would also apply to progressive and proportional as it is the base of the definition. I think using strictly income for the base of measurement is limited for a broad definition. With consumption it uses a cross-section time frame (the assumption that savings is never spent), which is why some studies use consumption as the base for factoring progressivity. Consumption may not be regressive provided that they are uniformly applied. Consumption taxes are time-neutral, and so the amount taxed (or, more precisely, the present value of the amount taxed) is the same whether it is saved today and consumed tomorrow or whether it is consumed today; thus, the poor individual who has low savings and the wealthy individual who has high savings both end up paying taxes on their entire lifetime incomes (another measurement used). See Value-Added Taxation: A Tax Whose Time Has Come?, by Gilbert E. Metcalf, The Journal of Economic Perspectives (1995). In practice, many US state retail sales taxes are not uniformly applied; for example, they tax goods and services at a different rate. When the tax is not uniform, then it may end up being regressive or progressive depending on buying habits. This goes into aspects of luxury taxes and exemptions on necessities. The tax base is part of the measure, which is why tabacco (an excise tax) is regressive - it is not uniform and is more often paid by lower income individuals. The same tax on caviar would be progressive.

I also understand the arguement that progressive and regressive are often discussed as measured by income, which in most cases is discussing income taxes. So I'm trying to think of a broad term that we can use that we could later define to mean several forms of measurement (yearly income, lifetime income, expenditure, wealth) as different methods of calculating progressivity. There are also differences in measuring total income and taxable income or total expenditures and taxable expenditures. Britanica defines it as "Progressive tax is a tax that imposes a larger burden (relative to resources) on those who are richer; its opposite, a regressive tax, imposes a lesser burden on the wealthy." Fairly simplistic but it avoids the issues we're having. I found some places that use the term "ability-to-pay", which seemed like a good way to describe it as that term could be applied to all the forms of measurement. "Economic well-being" seems like another good way to describe it. We could later define the term as being measured in differnt ways by economists. At that point, it might be good to mention formal economic models form measuring tax progressivity like the suits index, gini coefficient, tax concentration coefficient, etc. Thoughts? Morphh ^(talk) 2:40, 24 January 2008 (UTC)

The current version of the definition is much better than it was one week ago. We have to think about how to improve the phrase "ability-to-pay", for now I am going to change it to your second proposal "economic well-being", although I would like simple "income" better. --Doopdoop (talk) 22:55, 24 January 2008 (UTC)

While I rewrote it, I still think it was clearer before and well supported. Some main dictionaries support the statement that it not just income but the tax base. Regarding the term regressive tax. Webster (3): decreasing in rate as the base increases (a regressive tax), Dictionary.com (3).(of tax) decreasing proportionately with an increase in the tax base., American Heritage 3. Decreasing proportionately as the amount taxed increases: a regressive tax. While in many cases the tax base is income, specifying income as the only base used for measure is inaccurate. I'm going to study this and perhaps reword it again. Morphh ^(talk) 20:27, 08 April 2008 (UTC)

Merge / Split Restructuring

I'm going to suggest that we break this article into two parts: (1) what it means for a tax to be 'progressive,' and (2) a history of and arguments for and against progressive income taxation. I believe that the first (along with the article Regressive tax) should be merged into Tax incidence, and that the second be moved to Progressive income tax. My reasons for suggesting this are several: (1) it is needlessly repetitive and administratively burdensome to have an accurate economic description of progressivity on this page, Regressive tax, and Tax incidence, and it more naturally fits into Tax incidence; (2) this article contains only information about progressive income taxes, not of any other progressive tax; (3) the article includes a history of progressive income taxes which could be much richer and more globalized and would then deserve an article of its own; (4) both this article and Regressive tax contain statements which suggest that consumption taxes are regressive, even when uniform, which is not correct. See, e.g., Value-Added Taxation: A Tax Whose Time Has Come?, by Gilbert E. Metcalf, The Journal of Economic Perspectives (1995) (for a good introduction to existing research, look at its references). If you disagree with reason (4), as I'm sure someone will, that just makes my point about the restructuring - the debate should be going on in Talk:Tax incidence, not on both the Regressive tax and Progressive tax pages. Danculley 04:19, 11 January 2007 (UTC)

I see Progressive and Regressive taxation different then Tax incidence. While aspects of tax incidence can be determined by these aspects, tax incidence can include much more about where the burden of taxation falls as taxes are applied to business for example. I would oppose a merge into Tax incidence. I wouldn't mind so much a merge of the two Progressive and Regressive articles into one that included (1) & (2). Or perhaps a new article that covers (2) with a summary style addition to each article. The second thought is interesting and I'm still thinking about it. Which article should contain the bulk of this topic with the other having a summary - either way, history of and arguments for and against progressive income taxation would be better in one location with a reference to it from other articles. I agree with (4), however, this is a terminology issue that should be discussed in more detail as such statements are commonly made against consumption taxes. They operate on a different base so any consumption tax is going to be regressive on income using an income base terminology but could be flat or progressive on a consumption base. The terminology is used to twist the percieved effect. Using such, it could be stated that even an effective tax rate of 0% on consumption is regressive as low income earners are taxed on 100% of income. High income earners may pay a much higher effective rate (18% for example) but would be limited to their consumption (say 70% of income). Since some use the income base to determine regressive aspects - in this example the low income earner is taxed on 100% of their income while the high income earner is taxed on 70%. They use the definition of an income tax to determine the regressive/progressive aspect of a consumption tax. Such is decieving in regard to the effect as in this example the effective rate on consumption is 0% for the low income earner and 18% for the high earner, which is progressive. Morphh ^(talk) 05:02, 11 January 2007 (UTC)

Although I still see the progressive/regressive divide as an element of tax incidence, I think there is probably enough content to justify a separate article ("Progressive, proportional, and regressive tax/taxes/taxation"?), so I'll bite. I'm more than willing to put in the time to write something, but I'd like to gather a little more consensus on structure. I'm thinking of dividing it between basics such as the base (income, consumption, wealth) and time-scale (cross-section, lifetime), impact of uniform rates v. exemptions, how to compare progressivity or regressivity of taxes on different bases, and general examples. Thoughts anyone? Also, the title needs some work. Danculley 07:33, 13 January 2007 (UTC)

Sounds like a good structure to me and I'm glad your looking at time scale as well - particularly with consumption as regressive statements are also generally one year snapshots and don't take into account that the income is spent sometime in the future. More consensus should probably be received before any article title changes / merges / moves. I would probably start by expanding one or both of the articles as you've outlined with summary links to the other article for specific areas. Since Proportional tax redirects to Flat tax, we may want to consider changing this redirect into its own article that is more inline with these tax theories. I'd support one article for this topic but I like to merge articles, where others may prefer many smaller articles. Morphh ^(talk) 02:44, 14 January 2007 (UTC)

Why are Regressive Tax and Progressive tax not combined?

I don't get why Regressive tax and Progressive tax get separate pages. Unless there is one page, which begins with definitions and metrics, both pages our not NPOV, IMHO. 70.22.67.251 (talk) 22:22, 12 February 2008 (UTC)

I guess it was thought that both have enough content on their own to justify it. A suggestion could be made to combine regressive, progressive, and proportional into one article. As far as NPOV, such content should be able to balance regardless of the article separation. We're likely to get into duplication of arguments though. We discussed it here at one point. I don't think I would object to a merge but I'd have to reread the articles and think about how they should be expanded. Morphh ^(talk) 14:14, 14 February 2008 (UTC)

I think I would support a merger into an article like Tax progressivity, that listed all three and had a summary style section on tax incidence. I would suggest removing the information on particular countries - those particulars can be discussed on the country taxation articles. Perhaps I'll put banners up to discuss the merger. Morphh ^(talk) 15:14, 20 February 2008 (UTC)

I'd support merger. But the title would better be Regressive and Progressive Taxation just to appear more NPOV

I didn't even know there was a proportional tax page. Obviously that should go in merged article. The gist (without discounting the nuances) of all this is the relationship between any particular tax and the income/wealth (not the same thing) stratifications of society. 70.22.67.251 (talk) 16:25, 22 February 2008 (UTC)

Should there be any concern regarding the other languages that link. They each seem to have seperate pages, how do we incorporate all the languages for each progressive and regressive article. Morphh ^(talk) 15:13, 13 April 2008 (UTC)

For the record, I oppose this merge. There is sufficient content in the Regressive and Progressive tax articles to justify their continued seperation, and the concepts seem different enough. Nutiketaiel (talk) 13:26, 15 July 2008 (UTC)

• I also oppose the merge. I think in general, wikipedia is more usable to end-users when it has separate articles on articles that are "two sides of the same coin". In this specific instance, in the U.S., the FICA/Payroll tax would be an example of a regressive tax, whereas the income tax would be an example of a progressive tax. They are clearly different things! Cazort (talk) 23:35, 9 April 2009 (UTC)

Changes

Not sure I like the recent changes to the lead. Took a technical definition and made it way too simple. I don't mind include a "In simple terms, ..." type explanation but let's leave in the technical information. Morphh ^(talk) 20:45, 11 June 2008 (UTC)

I'm going to try to revert this to some degree. Since much was done, I'll review each edit. Morphh ^(talk) 13:09, 16 June 2008 (UTC)

The editor's stated intention was to reduce confusiong regarding progressive income taxes and progressive taxation, but I thought much of the changes created confusion and some of it was POV or partly correct depending on the situtation. Since progressive income taxes is the primary example of a progressive tax system, I'm not sure where the confusion lies unless it appeared that only income taxation was progressive, which I don't think the prior lead implied. I didn't fully get why it was important to create "two categories". I thought the table was confusing and offered little. Sentences like "Considering there is no option that would be "proportional", the obvious choices come down to whether people would prefer progressive or regressive. There are few reasons except cronyism to actually favor regressive taxation, which has historically been the best way to create an uprising (in particular the extremely regressive food and alcohol taxes have caused numerous uprisings)." were POV and unsupported. Morphh ^(talk) 13:57, 16 June 2008 (UTC)

Argument for

"As income levels rise, levels of consumption tend to rise. Thus it is often argued that economic demand can be stimulated by reducing the tax burden on lower incomes while raising the burden on higher incomes."

This argument really needs a citation about how the wealthy spend vs. how the poor spend, otherwise, it's bad OR. 64.9.234.12 (talk) 01:03, 13 July 2008 (UTC)

Progressive taxation is a wealth redistribution mechanism used to avoid the natural market driven emergence of a permanant moneyed aristocracy. This more fundemental explanation should be kept; the other explnations given here delute the discussion with less grounded ideas. In addition, the 2nd order "explanations for" allow for diluted and confused arguments against the tax to be listed here. Things should be kept first order, and grounded in hard facts regarding a contreversial topic like this, -at least on this page. Other pages can speculate philosophically or econimically about human nature. There are a few clear facts here, they should be given first.

I agree, this relates to economic mobility. The current article does not even mention or link to this term. Cazort (talk) 23:37, 9 April 2009 (UTC)

Progressive definition incomplete

The definition of "progressive" is incomplete in the sense that it does not take into consideration the tax/benefit ratio. For example, Social Security tax can be labeled "not progressive" in the sense that the highest earners pay a far lower rate in SS taxes on income than do the poor, because of the $80K (or whatever) ceiling.

However, those earning at the ceiling get far less in benefits relative to "contributions" than do the minimum-wage earners, making the SS tax a progressive tax. —Preceding unsigned comment added by 66.93.216.25 (talk) 21:19, 5 August 2008 (UTC)

I agree with you there. I think this would be labeled as progressive spending. So the tax is regressive, but the spending is progressive, which may result in an overall progressive effect with regard to the social program. Morphh ^(talk) 0:17, 06 August 2008 (UTC)

I disagree, but only to an extent. I would say that SocSec is a flat tax, but at the same time has a greater tax incidence on the poor per unit income (i.e., all persons making less than the SocSec tax cap). That's my fundamental disagreement with calling any and all taxes which fall disproportionally on the poor with respect to income "regressive." These categorizations (progressive, regressive, etc.) are descriptions of the tax's structure, not it's incidence. However, most people easily confuse the two... Foofighter20x (talk) 01:05, 6 August 2008 (UTC)

Klein article ref

An article by Klein(ref name="Klein2">Klein, G. P. (2006-11-15). "Why Intellectuals Still Support Socialism". Ludwig Von Mises Institute. Retrieved 2007-08-21.</ref> is referenced regarding how many economists support progressive taxation. Near as I can see, that article says they support redistribution policies but doesn't say anything specific about progressive taxation, so I'm pulling that ref out. There's two other refs for the same material which I haven't been able to check yet. CRETOG8(t/c) 04:19, 20 August 2008 (UTC)

Please also note that footnote 32 does not support the claim about Swedish tax in the page content. —Preceding unsigned comment added by 99.238.190.84 (talk) 17:46, 3 January 2009 (UTC)

Error in describing how taxes are calculated?

In one of the arguments for implementation, it is stated:

A progressive tax is an automatic stabilizer in the sense that if a person were to suffer a decrease in wages due to a recession then the money regained by being in a lower tax bracket lessens this blow.

This is either true of no progressive tax systems or only some progressive tax systems and should be explained as such. In the United States, at least, a tax percentage is only taken on the money within that bracket. For example, if there is a $0–50 000 bracket of 10% and a $50 001–100 000 bracket of 20%, a person making $75 000 would pay 10% of the first $50 000 ($5 000) and then 20% of the remaining $25 000 ($5 000), for a total of $10 000. Under this system, a person who drops down to $50 000 of income would still pay only 10% on that income, resulting in the same $5 000 on the $50 000 of income. They regain no money from dropping into a lower tax bracket, because the higher tax rate only applied to the money they were making over and above the tax bracket that they are now in. noktulo (talk) 22:20, 7 May 2009 (UTC)

I think your correct noktulo. I think the statement should be removed, unless there is really some point in stating it and then clarifying the point as moot. It's not sourced and seems like original research. Morphh ^(talk) 14:40, 10 May 2009 (UTC)

images missing

... —Preceding unsigned comment added by 84.44.176.76 (talk) 11:12, 24 July 2009 (UTC)

Pro and con lists

The arguments for/against implementation are a pro and con list. It doesn't look particularly easy to merge them into prose, but if someone's looking for a way to improve the article, this would be one. --Explodicle (T/C) 19:11, 25 August 2009 (UTC)

I have been searching the web for hours looking for the pros/cons of many different economic ideas. A PRO/CON list is VERY HELPFUL. I understand that wikipedia doesn't like it as it's not necessarily neutral, but for the purposes of this article, this is an important section to have. Please keep it.

199.126.128.121 (talk) 03:19, 29 October 2012 (UTC)

The intent would be to rework the list into prose, so the content would not be lost, but it would be presented in a more encyclopaedic way that provides more balance and discussion of the points. Morphh ^(talk) 14:47, 29 October 2012 (UTC)

Arguments Against

Bullets one and two seem to be the same concept, but number one seems very POV and lacks citation. I'm going to remove it.

1. Progressive taxation is a direct violation of the principle of individual rights, since the tax payer who pays a higher percentage of their income does not receive a comparable percentage increase in benefits[citation needed].
2. It has been argued that progressive taxation violates the principle of equality under the law.[24]

-Laikalynx (talk) 18:27, 25 January 2010 (UTC)

Effective Progression

I am new to this and I am not at all sure I have entered my comments in the appropriate place. Please be forgiving and assist me if I have erred.

Effective Progression:

The current text in this section states: "An effective progression[30] can be computed from inequality measures. The following example [formula] uses the Gini coefficient:"

This section needs elaboration. The reference cited is in German. The text quoted above is insufficient to determine what is being said. I am aware of no work in English which can generate a progressive income tax schedule directly from any measure of inequality. Moreover, the lack of the ability to translate the intuitively appealing, and almost universally acknowledged, notion that money has decreasing marginal utility at the top end of the income scale into a tax schedule is one of the key arguments against the assertion that a progressive income tax is equitable. Without a mathematical method to translate that notion into a tax schedule--which may be defended to those who raise questions of vertical equity--many argue that progressive income taxes are arbitrary. Even though I personally find the relative sacrifice arguments in favor of progressive income taxes compelling (As an American I am proud to pay my taxes and do my duty to my fellow Americans), I also recognize that the lack of a mathematical approach to calculating a progressive tax schedule remains a significant and valid concern which needs to be addressed. In lieu of such a method, the mean of income and the percentage of income remain the most transparent, if arguably misbegotten, mathematical method for assessing principles of benefit and equity. As Kip Hagopian, states in a 2011 paper entitled "The Inequity of the Progressive Income Tax" published in Policy Review, a public policy journal published by the Hoover Institution at Stanford University:

"Income is the most equitable (or least inequitable) measure of the value of benefits; thus taxes should be levied in proportion to income. Well-being is the ultimate benefit of government and income is a reasonable proxy for well-being..."

Proponents of progressive income tax surely would argue that the terms "least inequitable" or "reasonable proxy" are at least as ambiguous as the notion of the decreasing marginal utility of money, but the strength of the Hagopian argument is that there is a metric and a method. This is why the section of the Wikipedia article quoted above may be the most important part of the human debate over the vertical equity of progressive income taxes. I would relish the opportunity to discuss how to elaborate this passage with the author, as I do not have access to the German paper that was cited.

---

The section quoted below is also unclear and needs elaboration. Specifically, the phrase "... are sometimes used to factor progressivity through measures of inequality.." is not at all clear and it is not referenced. The work referenced in the section--fn 29--deals with measures of inequality not algorithms for generating progressive income tax schedules. I know of no algorithm at all that can generate a progressive income tax schedule, which is germane to equity concerns other than the intuitive notion that money has a decreasing marginal utility. The question that is begged is how much? And, therefore, what should the progressive rate amount to. Most if not all progressive income tax schedule arguments address economic efficiency, itself a valid concern, but they do not directly address equity beyond the notion of the declining marginal utility of money at the high end. Most equity arguments shift subtly to efficiency arguments and thereby beg the equity question. Of course the economic efficiency argument is important (supply and demand side arguments concerning savings, investment, demand, and spending, occupy the terrain of economic efficiency), but so is the equity argument.

"Measuring progressivity

Models such as the Suits index, Gini coefficient, Theil index, Atkinson index, and Robin Hood index are sometimes used to factor progressivity through measures of inequality of income distribution or inequality of wealth distribution.[29]"

---

In addition, a later section entitled "Formula," is unclear. It seems to imply that a progressive income tax schedule, which meets challenges of vertical equity, can be generated by a regression formula. This section also lacks references entirely.

"Formula

A progressive tax rate can also be achieved by mathematical formula. A simple progressive tax is described by a linear equation of the form y=mx+b, relating tax rate y to income x with the slope m being greater than zero. Setting the slope m to zero would convert this to a flat tax. A progressive tax by formula can also implement a negative income tax by setting the y-axis intercept b to a value less than zero. No additional verbiage is needed to implement a negative income tax within a progressive tax system. Tax rates can be altered as often as needed by simply adjusting the values of the variables in the equation, no rewriting of tax laws, codes, etc. are needed. More complex progressive systems can be created by using a non-linear equation."

I am unaware of any regression model capable of producing a progressive income tax schedule or any other tax schedule that is relevant to challenges of vertical equity. This is so because it is the values of M and b in the above formula--which would need to be generated mathematically--are not themselves derived. Without that, any value of M or b might be substituted, which is the entire point of the argument about arbitrariness and lack of equity, even though the existence of some slope greater than zero may be based on the intuitively acceptable concept of the marginal utility of money, ability to pay, and so forth. As the author notes, simply changing the values also changes the algorithm from a progressive tax to a proportional or flat tax. This appears to show, as I suspect, that any regression model is without underlying substantive merit in that it is silent on equity issues.

The next sentence should be deleted--"Tax rates can be altered as often as needed by simply adjusting the values of the variables in the equation, no rewriting of tax laws, codes, etc. are needed." This statement has no reference. Since the values of M and b in the equation are the effective tax rate, it is precisely those values that would need to be enacted by legislation. It is those precise values that need to be generated mathematically in a way that is relevant to arguments about equity and arbitrariness. Having worked for congress many years I cannot imagine any actual Congress devolving this authority to IRS and the executive branch with "no rewriting of tax laws." The sentence seems as if it might be ironic or perhaps even sarcastic.

Finally, the last sentence needs elaboration as well. If there are non-linear regression algorithms that result in progressive tax schedules this needs to be elaborated and referenced.

Unless the author is aware of some work, not cited, that I am unaware of, I believe the entire section should be deleted because it does not illuminate or communicate to Wikipedia readers any key portion of the debates about income tax rates or how to derive them.

I would relish the opportunity to discuss my reflections with the authors (I do not understand how to address them directly) or others in order that Wikipedia may better serve to reflect the state-of-the-art work on these important and controversial issues.

Wikipedia rates this article as highly important and a starter article in need of elaboration. I stand ready to assist in making this article a better reflection of the current debates. There is important more recent work which should be incorporated into this article.

It may be of interest to other members that I have developed a potential metric for generating a progressive income tax schedule that in principle can withstand scrutiny from the argument about equity and arbitrariness. It has nothing to do with Rawls' work about equity and justice per se. This work is not yet published but I would relish the opportunity to discuss this with other members in a different and more appropriate venue.

I have not previously made such an entry to Wikipedia and I am not sure that I have made it in the proper place. So please be kind and help me here.

It is my understanding that I am to enter four symbols below in lieu of my own signature but I want to ensure that others know who I am so that they may contact me.

I remain, cordially yours, dfscudder

Signed Dfscudder (talk) 23:27, 16 January 2012 (UTC)

Use of the Gini coefficient to measure progressiveness would require some care and understanding. Reference 11, which is used to support the counter-intuitive claim from the introduction of the article that "when refundable tax credits and other tax incentives are included across the entire income spectrum, the United States has the most progressive income tax code among its peer nations" appears to be a good example of what not to do. Per a footnote in the reference, the authors seem to have applied the Gini Coefficient definition, operating on the taxes paid by households (rather than on household incomes) with no consideration of the inequality of the underlying incomes. It is obvious that a neutral, (or even a regressive), tax scheme would appear progressive by this measure if the underlying income distribution was radically unequal. --Asdunc (talk) 21:14, 30 April 2012 (UTC)

Regarding the United States having the most progressive tax system(OECD) and inequality

"Over at the Yglesias blog, a commentor named Peter Whiteford very usefully explains the table as follows:"

"I am the person who wrote the chapter in the OECD report that is the basis of these figures. It is part of a report on the distribution of income to households, so it doesn’t include taxes that are not directly paid by households, since these are not included in income surveys....[T]he table also calculates the distribution of taxes for the household as whole after adjusting for the number of people in the household, so it will differ from data calculated on income tax returns which are not adjusted for household size.

As others have pointed out this measure includes all direct taxes on individuals so it includes income taxes and employee social security contributions, but not employer payroll taxes. It also doesn’t include sales taxes, but these are much heavier in most other OECD countries, and not as progressive as direct taxes, so if you added indirect taxes in through some sort of modelling it is almost certain that the USA would still have the most progressive overall tax system. However, as the OECD report points out, progressivity is not the same as redistribution. Progressivity measures how the distribution of the tax burden is shared, while redistribution measures how much the tax system reduces inequality. Redistribution is influenced both by the progressivity of taxes and the level of taxes collected.

In fact, the US system of direct taxes actually reduces inequality more than any other country as well. But overall, the USA reduces inequality a lot less than most other countries, because the other thing that you need to take into account is what taxes get spent on. Now the US system of social security and cash benefits reduces inequality by less than any other OECD country except Korea. The US social security system is marginally less progressive then the OECD average, but the level of spending is very low – only Mexico and Korea spend less in the OECD. So while the US tax system is progressive and reduces inequality, the US welfare state is much less effective at reducing inequality. And because the US has a very unequal distribution of income from capital and a much wider wage distribution than many other OECD countries, it ends up as a relatively unequal country after taxes and benefits.

If you look at Nordic countries, they all have much less progressive tax systems than the USA, but they collect a lot more in taxes (including in VAT). They then spend this much higher tax revenue on social security and services, and it is this side of the equation that is most important in reducing inequality. So the implication is not that the USA either needs to increase or reduce the progressivity of the tax system. If you want to reduce inequality, you need to increase the level of taxes collected and spend it more effectively."

Somedifferentstuff (talk) 11:00, 7 June 2012 (UTC)

Adam Smith and progressive tax

Firebug is mentioning Adam Smith is "alluding" to a progressive income tax. But he's not. Charging a higher tax to a person with a higher income, through charging a higher toll, is not necessarily taking a higher percentage of his income. Rather, it's equalizing what would otherwise amount to a regressive tax on income. RJII 06:28, 5 December 2005 (UTC)

I added an additional quote justifying the statement that Smith favored progressive taxation. Furthermore, the statement specifically advocates that luxury coaches be taxed "higher in proportion to their weight, than upon carriages of necessary use", which is clearly progressive taxation. Progressivism need not be limited solely to income taxation (which wasn't the primary source of government revenue in Smith's day, in any case). Later in the same essay, Smith argued that members of society should pay taxes "in proportion to their respective abilities". Again, this is clearly a defense of the principles of progressive taxation, when taken in conjunction with the quote above. Firebug 06:51, 5 December 2005 (UTC)

That's not what a progressive tax is. A progressive tax means the percentage of income taken increases with increases in income. If you charge a ten dollar tax to a person that gets a $100 paycheck, and a one hundred dollar tax to a person that makes $1000 paycheck, that's an increase in absolute tax only ..not in percentage. Therefore, it's not a progressive tax. RJII 06:58, 5 December 2005 (UTC)

If you charge a luxury coach a toll of 20 cents per pound, and a "carriage of necessary use" a toll of only 10 cents per pound, that's a progressive tax. And that's what Smith is advocating here. Firebug 07:03, 5 December 2005 (UTC)

That's not a progressive tax but a flat tax. A luxury car coach is driven by a wealthier person so he pays a higher tax, in order that the poorer person doesn't pay a higher percentage of his income. RJII 07:07, 5 December 2005 (UTC)

You are playing games with words here. The tax Smith describes is progressive in and of itself, regardless of whether it is counterbalanced by other, more regressive taxes. Furthermore, you have provided no source for your assertion that the progressive tax was invented by Karl Marx. This is merely an attempt to smear a concept you don't like by guilt with association. Good old fashioned McCarthyism. Firebug 07:16, 5 December 2005 (UTC)

No, that's not a progressive tax in and of itself. There is no such thing. A progressive tax is related to income. I put the Marx statement there because it's the earliest explicit advocacy that I know of off the top of my head. I haven't done any significant research on the matter, nor do I have the inclination --it's a boring topic for me. If you know of an earlier instance, then by all means change it. RJII 07:26, 5 December 2005 (UTC)

Interesting, then, that you made 6 edits to the article and 8 to the talk page in one night. If you find it so boring, perhaps you should edit other pages instead. Firebug 07:31, 5 December 2005 (UTC)

Good idea. I'll take you up on that. Have at it. RJII 17:22, 5 December 2005 (UTC)

Adam Smith and Jefferson should not be cited as supporters of the progressive income tax as they never spoke of it.

These are bad interpretations of both Adam Smith and Thomas Jefferson. In no way does these suggest that these are progressive by today’s definition. In fact, in their time, Free Market Capitalism was progressive. Today no one but libertarians believes this. The interpretation here is bad. (CosmopolitanCapitalist 15:38, 16 August 2006 (UTC))

Adam Smith is being misquoted in this article. His argument was that if one bases a tax on the value of a property the rich will pay more because they have more lavish properties and the poorest people own no property at all (i.e., they rent). He was not arguing in favor of a "progressive" income tax! ((Unsigned post))

I don't think the Adam Smith quote belongs in the article and have removed it. Somedifferentstuff (talk) 13:22, 7 June 2012 (UTC)

Removal of page needed tag and usage of Amazon.com listing

User: 173.74.164.212, why have you twice removed a page needed tag as well as used an Amazon.com listing as a reference? Somedifferentstuff (talk) 09:21, 7 June 2012 (UTC)

User Somedifferentstuff,

See edit summaries. I have reinstated tags you have removed as well. "Amazon" is not the source, the source is the book "Monetarism and Supply Side Economics: Free Market Thought in the Late 20th Century" by Dr. Arjo Klamer and Alan Reynolds. I can revert to APA, MLA or Chicago style citation, but Amazon provides users with a direct link and is consistent with wikipedia citation policy. You have also removed many arguments backed by multiple sources for instance after unilaterally declaring "need a better source". Please stop your ideological vandalism! 173.74.164.212 (talk) 05:53, 9 June 2012 (UTC)

"but Amazon provides users with a direct link and is consistent with wikipedia citation policy." Incorrect. Don't link to Amazon (a commercial bookseller), just provide the citation.

You added a reference formatted as, www.heritage.org/research/reports/2003/08/the-historical-lessons-of-lower-tax-rates. This is called a bare url and is not how you cite a webpage. Citations require retrieval dates as well as titles.

Provide here what you think should go in the "against" section, with the sources, and we can discuss it. Somedifferentstuff (talk) 15:56, 9 June 2012 (UTC)

Maybe you should have started with the talk page before unilaterally removing sourced material, starting with this edit http://en.wikipedia.org/w/index.php?title=Progressive_tax&diff=492995774&oldid=490576346

I will re-instate SOURCED material that existed as a consensus, then we can have a discussion. 173.74.164.212 (talk) 23:03, 9 June 2012 (UTC)

Regarding the History section being American centric

User: 173.74.164.212, this article is not about progressive taxation in the U.S., it's about progressive taxation in general. I will re-post a comment an editor posted on your talk page,

Be careful as to not make the article too U.S. centric. Sentences like the ones you added... "In the United States the first progressive income tax was established by the Revenue Act of 1862 which repealed the previous flat tax. The progressivity of income tax rate in United States has greatly varied since the passing of the Thirteenth Amendment from as low as 7% in 1913 to as high as 94% in 1944. Since the 1960s nominal income tax rate in United States has become less progressive." The give the impression that this is an article about Progressive taxation in the United States, which it's not. These statements might be better in such articles as the Taxation history of the United States or Income tax in the United States. Keep in mind that Progressive tax is a global article and should not be dominated by the examples or history of a single country. Morphh ^(talk) 13:12, 8 June 2012 (UTC)

I've removed much of the material added by User: 173.74.164.212. Somedifferentstuff (talk) 17:17, 9 June 2012 (UTC)

Fine with me. You haven't helped the section & I have removed the quotation as it had absolutely nothing to do with HISTORY. 173.74.164.212 (talk) 23:03, 9 June 2012 (UTC)

The quote does have to do with history. The beginning states, "The question of tax progressivity – who should bear the tax burden – has fascinated tax philosophers for over a century..." - It's also from a Professor of Economics. I have reinstated the quote. Somedifferentstuff (talk) 23:20, 9 June 2012 (UTC)

Utterly vague. A statement such as "has fascinated tax philosophers for over a century" adds nothing of value to the HISTORY section. If you want to add to the section, add something substantive as I have. I have removed it. 173.74.164.212 (talk) 23:39, 9 June 2012 (UTC)

You need to explain how this statement is not related to History: "The question of tax progressivity – who should bear the tax burden – has fascinated tax philosophers for over a century, and remains highly controversial... ". Reinstated. Somedifferentstuff (talk) 23:48, 9 June 2012 (UTC)

The section used to be called "History of intellectual debate" YOU changed it to "History". Your material applies to the earlier title of the section, not the one you changed it to. Ironic. History is examples of implementation as I have provided. You haven't added anything substantive or relevant to the section. Remove it yourself or I will remove it if no satisfactory answer is provided. - 173.74.164.212 (talk) 00:03, 10 June 2012 (UTC)

You need to do better than that. "has fascinated tax philosophers for over a century" is clearly a historical statement. It's also well sourced and from a Professor of Economics. I'll check back in tomorrow. Somedifferentstuff (talk) 00:08, 10 June 2012 (UTC)

I removed part of the quote that had nothing to do with HISTORY. I will leave it as that for now. There are plenty of Professors of Economics and they all have plenty of opinions. History section has to be FACTUAL. If you want to help the article, actually go research history of progressive taxation like I have added material about earliest known progressive tax and progressive taxation history in US, instead of inserting irrelevant quotes and then acting stubborn. - 173.74.164.212 (talk) 00:32, 10 June 2012 (UTC)

Much of the information you added needed to be removed because it was U.S. centric (not good). Moving on, while it is an informative quote, trimming it down for the history section makes sense. Somedifferentstuff (talk) 13:17, 10 June 2012 (UTC)

This article is about progressive taxation

I've removed 3 bullet points from the "against" section because they don't mention progressive taxation, the topic of this article. One bullet point stated, "Higher taxes lead to capital flight." This article isn't about "higher taxes", it's about progressive taxes. This violates WP:OR (From the page: "To demonstrate that you are not adding OR, you must be able to cite reliable, published sources that are directly related to the topic of the article.) In order for it to go in the article it would need to state, "Progressive taxes lead to capital flight." This type of addition is fine as long as the source used to support it clearly states that progressive taxation leads to capital flight. Somedifferentstuff (talk) 13:46, 10 June 2012 (UTC)

I will replace "Higher taxes" with "Progressive tax" then. Tax hikes that resulted in capital flight WERE PROGRESSIVE. ACTUALLY try reading the sources. Reinstated. And what were your reasons for removing the other bullets? None provide! This is your last warning. Do not unilaterally remove sourced material or you'll be reported for ban. Try reading a Macro textbook. I don't have time to explain basic economics to you. All the effects listed are tied to progressive taxation. — Preceding unsigned comment added by 173.74.164.212 (talk) 04:51, 12 June 2012 (UTC)

That's not how it works. All you did was change the wording to "High progressive taxes lead to capital flight". You need sources, as I explained, that specifically state, "Progressive taxes lead to capital flight", otherwise it is a violation of WP:OR. The first two sources don't even mention progressive taxation and the third source doesn't have a page number. I removed the other two bullets because neither of them mentioned progressive taxation, the topic of this article. I am placing another edit warring warning on your talk page. I know that you have less than 50 edits on wikipedia but that is no excuse for this type of behavior. Somedifferentstuff (talk) 08:26, 12 June 2012 (UTC)

I have provided sources. Try learning how to read. I may not have wikipedia editing experience (irrelevant), but I actually have an undergrad in Economics. Why wikipedia let's economic illiterates like you edit is beyond me. Like I said start with a textbook on Macro. Progressive taxation is very much related. Actually try reading the sources. - 173.74.164.212 (talk) 23:16, 12 June 2012 (UTC)

What sources have you provided? LIST THEM HERE SO THEY CAN BE EVALUATED. Regarding bullet point number 1, the first two sources don't even mention progressive taxation. The third source doesn't provide a page number. I removed the other two bullets because neither of them mention progressive taxation, the topic of this article. Somedifferentstuff (talk) 10:04, 14 June 2012 (UTC)

Economic Effects Sections

I have never edited a Wikipedia article before, though I have read my fair share, but this article seems, well, especially incomplete. As of now, the economic effects section simply reads: " Economic effects

Progressive taxation has a variety of economic effects.

Income inequality

Progressive taxation reduces absolute income inequality " To me, it seems fairly pointless to even have that section there if nothing is going to be said about it. Now, along with never having edited a Wiki article before, I am in no way shape or form a tax expert and so thought it would be a good idea to put this out here for someone who is. I realize that it is quite a controversial topic, but it would be a useful one to have knowledge on, and, if not that, then the section, in my humble opinion, is pointless and should be deleted.

I didn't find the change or the reason for it in the recent history.

I also apologize if I'm doing any of this wrong. I'm truly trying to do this right, but as I've stated, this is my first post on a Wikipedia talk page, and I may be breaking some rule I am unaware of.

Ah, I just added a paragraph on this to Socialism so I'll take a look. Thanks for noticing the issue. Neo Poz (talk) 01:30, 24 February 2013 (UTC)

Also see this change. The sentence use to be longer but was cut short, hence the current ending with a comma. Morphh ^(talk) 02:00, 24 February 2013 (UTC)

Great, thanks. The sources you used are helpful in themselves as well. — Preceding unsigned comment added by 173.127.81.41 (talk) 22:11, 24 February 2013 (UTC)

Assessment comment

The comment(s) below were originally left at Talk:Progressive tax/Comments, and are posted here for posterity. Following several discussions in past years, these subpages are now deprecated. The comments may be irrelevant or outdated; if so, please feel free to remove this section.

==WP Tax Class== Start class, but should go to B class with other people's assent.EECavazos ==WP Tax Priority== High priority because important worldwide and high traffic. Could go to top because it is such a basic and pervasive topic.EECavazos 04:43, 7 November 2007 (UTC)

Last edited at 04:43, 7 November 2007 (UTC). Substituted at 21:56, 3 May 2016 (UTC)