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A case for progressive taxation

J.P. Zivalich | Thursday, February 23, 2012

Mark Easley (“A case for fair taxation,” Feb. 23),

We should have the same marginal tax rate for everyone. It makes sense, doesn’t it? In reality, a progressive tax structure is the most equitable taxation system in existence because of diminishing marginal utility of wealth. In non-economic terms, think of the willingness of a millionaire to shell out $100 versus the willingness of a minimum wage earner. The millionaire derives less utility from that $100 because she has less need and more disposable income than the laborer. Also, as a person’s income increases, marginal propensity to consume decreases. A progressive tax targets individuals who contribute less to aggregate demand and places a lesser tax burden on those who consume more at the margin.

Our economy is suffering from a lack of demand rather than any sort of crowding out scenario, showing a failure by politicians and the populace to understand liquidity trap economics and the Fisher equation. In addition, progressive taxes provide a deterrent to income inequality, which has greatly risen in America, as real wages have not been keeping up with productivity since the ‘70s. Some income inequality is necessary to motivate workers, but too much leads to situations comparable to that of Latin America and the violence stemming from wealth disparity. Progressive taxes are not an attack against the wealthy. They are an attack against a large wealth gap and on the destructive nature of said gap on the country as a whole.

Mr. Easley, there are some things that need to be addressed concerning your statements other than your underlying logic and lack of a proposed solution. You equated a higher tax on the wealthy to discrimination against minorities such as African Americans and Jews. This is at best, ignorant, and at worst, extremely offensive to these communities that have suffered through things such as slavery and the Holocaust. The trivialization of such atrocities should never be condoned in our political or economic discourse. Furthermore, your comparison of arguments supporting a progressive tax to communist tactics is again ignorant, if not McCarthyist, in nature. A rational debate that results in the best possible action is not possible when one side stigmatizes the other.

J.P. Zivalich

junior

Stanford Hall

Feb. 23