Progressive Taxation

"You cannot expect to pull up the weak by bringing down the strong." - Calvin Coolidge Calvin Coolidge, when he was president, knew that progressive tax rates were detrimental to the American economy and that a flatter tax system was the cure to the recession in 1920, when the tax rates were lowered across the board in the years 1921, 1924, and 1926, to a more flat tax code, business in America rebounded, wealth trickled down to the poor and by the end of the 1920s, Americans had higher wages, and had more common items that only ten years before, were viewed as luxuries. We should not weigh this debate on whether one group benefits from progressive taxation, we should weigh it based on whether all groups benefit from progressive taxation. If weighed in this manner, one should conclude that progressive taxation, on balanced, should be opposed for these reasons: - Progressive Taxation causes tax evasion - Progressive Taxation hurts the economy - Progressive Taxation crush the incentive to work Progressive taxation does cause tax evasion, as noticed by IRS statistics and by Tax "Justice" Groups, many wealthy individuals bypass the progressive tax through a series of Swiss Bank accounts and Tax havens, the easiest example of this is the progressive taxation during the Wilson presidency (1912 - 1920), in which the progressive tax of 10% on the wealthiest Americans was raised to 77% of all income, along with a small inheritance tax and an excess profits tax. The result of this was not more revenue, in fact, by 1920, the wealthiest Americans, as observed by the IRS, paid 29.9% of all income taxes, the middle America payed 9.1% and the poorest Americans paid 15.4% of all the income taxes. The high burden on the poor is a result of tax evasion, when the progressive tax was instituted, the cost to evade taxes became less than the cost to pay taxes, thus, much of America's economic activity, and its wealthiest citizens ended up going underground, or in the black market, to hide taxable income, even the most vigorous proponents of Progressive taxation were known to use tax shelters, Ted Kennedy, a wealthy politician, was hiding $600 million in taxable income while he was promoting the installation of progressive taxation. Mellon summarizes this trend through his quote: "The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business." When taxes are not paid, the burden moves to the poorer Americans, progressive taxation entails high taxes on the wealthiest Americans, high taxes are evaded. Secondly, the Progressive tax is an overall burden to the economy, when Herbert Hoover was president, he re installed the highly progressive tax by placing a 66% income tax rate on the wealthiest Americans, the result was the Great Depression. When Woodrow Wilson created a Progressive Tax system, he caused the recession of 1920 and moved American economic activity to the black market. When Progressive Taxation was upheld from Franklin Roosevelt onward, the surplus production of World War II created prosperity from 1950 to 1964, but when the surpluses ran out, the Stagflation of the 1970s hit Americans of all incomes, prices were raised and unemployment and inflation hit double digits. It was Ronald Reagan's flatter tax plan that eliminated all of these problems and ushered in two decades of economic growth, started by Reagan and continued by Bush I and Clinton. When Warren Harding and Calvin Cooldige restored a flatter tax rate, the American economy expanded by 100%, and the wealthiest Americans, even after tax cuts, began to pay 61.3% of all the taxes, while the poor paid 1.1%, according the US Department of Treasury. Progressive taxes hinder American economic growth, when this happens, the poor who are, according to the pro, "dependent on the better off" cannot reap the benefits a "better off" group have, such as job creation and retail purchases which create jobs. Lastly, Progressive Taxes discourage harder work because they increase the burden of being rich. When a tax is instituted which results in a, for example, 10% penalty for being poor, but a 50% penalty for being rich, more people will see the incentive to be poor because taxes create too much of a burden. Under a progressive tax system, the wealthiest citizens are penalized by a system that confiscates more than half of their wealth, with a system which confiscates a vast percentage of one's wealth for merely being successful, hard work is discouraged, and just as seen with every Progressive tax European state, compared with America, which has a flatter rate, Europe produces less than the United States. Progressive tax is not a policy for any class of any given country, it promotes tax evasion, it hurts the economy and it discourages hard work, which produces a net loss for all classes, but mostly for the poorest citizens and especially the unemployed citizens.