Government agencies rely on taxes for the financial resources they need to provide a wide range of services and benefits, from building roads and parks to funding welfare programs and national defense. Some taxes, such as the federal income tax, are progressive in nature, meaning you pay a higher percentage of your income as you make more money. Progressive tax systems tend to be unpopular among financial conservatives for a variety of philosophical and economic reasons.
Hurting Job Creators
Conservatives believe the wealthy are vital to the economy because they create the businesses and make the investments necessary to create jobs. Taxing wealthy people at high rates leaves them with less cash left over to put into their businesses and other investments, so they create fewer jobs. Fewer jobs means there are fewer workers earning income that the government can collect taxes from, which ultimately reduces tax revenue. A common conservative argument is that reducing taxes will increase hiring and economic growth, creating more income that the government can tax, which makes up for the revenue lost by lowering tax rates in the first place.
Since progressive tax systems make you pay more as you earn more, conservatives argue that such systems punish success, which leads to undesirable consequences. For instance, conservatives argue that progressive taxes create a disincentive to work hard, which hurts productivity and makes people more likely to rely on government assistance. Punishing success also has the potential to hurt innovation, since people are less likely to take risks on new ideas if the government takes a big cut of profits.
Another argument against progressive taxation is that it constitutes a form of "class warfare" that pits the richest and poorest people against one another. According to Forbes, the richest 1 percent of taxpayers pay about 36 percent of federal income taxes, while the bottom 47 percent of income earners pay no income tax at all, a case of the poor "riding free" on others, according to SUNY Fredonia professor Stephen Kershnar. Many conservatives believe that people who benefit from progressive taxes generally favor shifting more of the tax burden onto the top earners.
One of the main goals of a progressive tax system is to charge taxes according to an individual's ability to pay, so that everyone pays his fair share. For example, a 15 percent tax rate could have a significant impact on the standard of living of someone making $20,000 a year, while it isn't likely to have much of an effect on someone making $1 million a year. Conservatives sometimes argue that imposing different tax rates on different people is inherently unfair and completely arbitrary. The amount that constitutes a “fair share” is subjective. Opponents of progressive taxes often propose that a flat tax that imposes the same tax rate on everyone is the fairest way to tax income.
Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.