Progressive Taxes

From Critiques Of Libertarianism
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Suggested by Adam Smith, first implemented in the USA: reduces inequality and supported by economic theory. Libertarians are generally antitax, but when they tolerate taxation they tend to prefer regressive taxation that favors their rich sponsors. Progressive taxation means that as you earn more, you are taxed at a higher rate.


Adam Smith's views in 1776 on the progressive burden of taxation [More...]
Adam Smith’s ideas about the justification for progressive rather than merely proportionate taxation.
America’s Taxation Tradition [More...]
Taxation to prevent an undemocratic distribution of wealth is an American, progressive-era invention which had enormous support.
Answering questions with questions [More...]
Good answers to a bunch of Hunter Baker questions about the justice of progressive taxation.
Squeezing the rich is good: even when it raises no money [More...]
Three examples of how unrestrained income for the wealthy is socially harmful and should be taxed, even if it doesn't raise more money.
The Case for a Progressive Tax: From Basic Research to Policy Recommendations [More...]
Peter Diamond and Emmanuel Saez explain progressive taxes with optimal tax theory They recommend high marginal tax rates, earnings subsidies to encourage low-income workers and taxation of capital income. They explain why other low-tax policy ideas are not relevant.
The importance of redistribution [More...]
"democratic egalitarianism"--the idea that individuals flourish best in a free society that allows them to choose democratically the rules that govern their lives, with the understanding that the institutions must be sustainable and must allow all individuals to flourish, not just a select few.
The Simple Analytics of Soaking the Rich [More...]
Why it makes sense (with standard microeconomics) to tax the rich more heavily, even if they were job creators.


There are other reasons to think that Hayek went too far in his opposition to progressive tax rates. First, he assumed that earned income accurately measures the value of the incremental contribution to social output. But Hayek overlooked that much of earned income reflects either rents that are unnecessary to call forth the efforts required to earn that income, in which case increasing the marginal tax rate on such earnings does not diminish effort and output. We also know as a result of a classic 1971 paper by Jack Hirshleifer that earned incomes often do not correspond to net social output. For example, incomes earned by stock and commodity traders reflect only in part incremental contributions to social output; they also reflect losses incurred by other traders... Insofar as earned incomes reflect not incremental contributions to social output but income transfers from other individuals, raising taxes on those incomes can actually increase aggregate output.
David Glasner, "Neo- and Other Liberalisms"