There's multiple glaring problems with your example, but the main issue for the economy is that Peter the poor spends a much larger proportion of his income as

There's multiple glaring problems with your example, but the main issue for the economy is that Peter the poor spends a much larger proportion of his income as a necessity to survive. Society as a whole benefits from Peter the poor paying proportionally less in taxes because Roy the rich simply does not consume the same proportion of his income (let's keep in mind, that in real life, Roy is 100,000 times richer than Pete, not 10x). Taxing Roy proportionately more is not only the ethical thing to do, but also the rational thing to do if you want a strong economy. These policies aren't about what you find fair, they're in place because they are what make society prosperous.