You're wrong because the marginal propensity to consume is significantly higher for a person of lower income. I.e. Costs of daily living may eat up 90% of a pe

You're wrong because the marginal propensity to consume is significantly higher for a person of lower income. I.e. Costs of daily living may eat up 90% of a person on $30k a year's income whereas they may only be 30% of a person on $120k. Therefore most progressive taxation systems offer an income free tax bracket. In Australia this is around 20k now; so up to 20k you pay $0 in tax. That acts to protec the living standards of those on low or minimal incomes whilst providing tax revenues that allow the government to supply the services people on higher incomes need to generate their higher incomes (roads, rail, water, safety etc)