My friend Kip Hagopian has a very thought-provoking article in the current issue of Policy Review on the (in)equity of the progressive income tax.
Here is a core point:
The progressive taxation of income from work effort is inequitable. Income is derived primarily from a combination of aptitude and work effort. All things being equal, people with high-value aptitudes earn more than those with low-value aptitudes. Each tier of aptitude (whether there be 100 or 10,000 such tiers) comprises a “mini-society” in which differentials in income between the members are derived almost solely from work effort. Under a progressive tax system, workers whose work effort is above the median in their aptitude tier will pay higher average taxes per hour than those below the median. As a result, at any one point in time, an unacceptably large percentage of the total work force will earn less average, after-tax income per hour than their peers, simply because they worked harder. This is inequitable on its face.
Policy Review does not invite comments, but Kip Hagopian has established his own site, KipHagopian.com, where he invites and welcomes thought and discussion.