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And what is the reason for that? People who make more will pay more even with flat tax rate — such is the nature of linear functions. Progressive tax rates, on

And what is the reason for that? People who make more will pay more even with flat tax rate — such is the nature of linear functions. Progressive tax rates, on the other hand, are completely not rational — they are rooted in contempt ("they earn so much, why can't they pay a little more than low-earners?"), which leads to perceived (if not actual) unfairness and enables evasion.

vkou 9y ago
Progressive tax rates are rooted on the indisputable fact that the marginal value of a dollar for someone in the lower 25% of incomes, is much lower then the marginal value of a dollar for someone in the upper 1% of incomes. People also don't evade taxes because they feel personally slighted. People evade taxes because the ROI on doing so is positive. Because they can, and because they won't go to jail for it.
- dpark 9y ago
  > the marginal value of a dollar for someone in the lower 25% of incomes, is much lower then the marginal value of a dollar for someone in the upper 1% of incomes. Did you say that backwards? The value of a dollar to someone in poverty is much higher than the value of a dollar to Bill Gates.
- ryanwaggoner 9y ago
  No, the post-hoc justification is sometimes anchored to the concept of marginal utility to the individual by people who want more progressive taxes. You rob banks because that's where the money is, not because you feel like the bank can more easily handle the loss.
  - caf 9y ago
    In this case though, it's not where the money is. Raising the bottom marginal rates produces far more additional tax revenue that raising the top ones.
Mvandenbergh 9y ago
Progressive tax rates are rooted not in contempt but in declining marginal utility curves.
BoiledCabbage 9y ago
I've slowly come to realize through personal interactions that a significant portion of the people who complain the loudest about taxes don't really understand them. Namely the two topics that came up in this thread. 1. The difference between marginal tax rate and effective tax rate. 2. The key motivating reason for a progressive tax policy vs. a flat tax.

vkou 9y ago

Progressive tax rates are rooted on the indisputable fact that the marginal value of a dollar for someone in the lower 25% of incomes, is much lower then the marginal value of a dollar for someone in the upper 1% of incomes. People also don't evade taxes because they feel personally slighted. People evade taxes because the ROI on doing so is positive. Because they can, and because they won't go to jail for it.

dpark 9y ago
> the marginal value of a dollar for someone in the lower 25% of incomes, is much lower then the marginal value of a dollar for someone in the upper 1% of incomes. Did you say that backwards? The value of a dollar to someone in poverty is much higher than the value of a dollar to Bill Gates.
ryanwaggoner 9y ago
No, the post-hoc justification is sometimes anchored to the concept of marginal utility to the individual by people who want more progressive taxes. You rob banks because that's where the money is, not because you feel like the bank can more easily handle the loss.
- caf 9y ago
  In this case though, it's not where the money is. Raising the bottom marginal rates produces far more additional tax revenue that raising the top ones.

Mvandenbergh 9y ago

Progressive tax rates are rooted not in contempt but in declining marginal utility curves.

BoiledCabbage 9y ago

I've slowly come to realize through personal interactions that a significant portion of the people who complain the loudest about taxes don't really understand them. Namely the two topics that came up in this thread. 1. The difference between marginal tax rate and effective tax rate. 2. The key motivating reason for a progressive tax policy vs. a flat tax.