The progressive income tax means that the better Jones becomes at producing wine, the more he must give to the government. Most academic economists are taught that an increase in productivity causes a decline in price, but this is not the way it works in practice. The baker, who made no effort to increase efficiency, would then get 2000 bottles for 1000 loaves. In practice, Jones produces 2000 bottles and Smith, whose bakery could support only his own family, can now hire his son to support his. They each make 1000 loaves.
Government is rewarded with tax revenues climbing because of the doubling of trade.
Jones's efforts to produce twice as much is rewarded by a doubling of his wages. As the government taxes the rich in order to feed the poor, it only can go so far before the tax walls between rich vintner and the poor baker prevent marginal trades of bottles for loaves. Probably the government, with the tax revenues it believed it would get by its tax on the rich, or, by borrowing loaves and bottles produced by Smith and Jones, in order to feed the baker's son and his family. By raising the wall on the side where productivity is highest and tending higher, the party hurt most is the party on the other side. Government of course implicitly acts along these principles when it gives a tax break to an individual who threatens to move his company from New York City to Connecticut, because local government's wall atop the state government wall atop the federal government wall threatens bankruptcy.