The Justice of Progressive Taxation

Consider a small group of people surviving in an isolated region by their labors. If the functioning of this little society necessitated that the group procure commodities (for example, materials for the construction of an aqueduct), then it would seem that each member of the group would be obligated to contribute an equal amount. It wouldn't be fair to require one of the members to contribute most of the wealth required by the group. Nor would it be fair to allow one to contribute less than a proportional fraction of the amount required by the group.

We can use this case to argue by analogy that taxation in a modern society such as America ought to be a matter of absolutely equal shares: a case that progressive taxation is wrong. Right away, we run into exceptions for children and the handicapped, of course. These are trivial cases where justice obliges us to waive the requirement of contribution. (Libertarians will say it isn't justice but charity that obliges us, but I don't wish to argue that point again.) The wealth or poverty of any individual wouldn't seem to be relevant to the amount he ought to contribute in tax, given that the success or failure in amassing wealth of any person in the small society imagined above wouldn't be relevant to the amount of aqueduct stones or mortar that he ought to contribute. There may be at the margin exceptions analogous to handicap amongst the poverty stricken: cases of bad luck similar to the impoverishment brought on by handicap, such as, for example, a man whose wealth is blown away by a tornado. Those are, again, trivial. The point is that thus far there is no prima facie requirement that the wealthy pay a greater absolute amount in tax than people in either the middle class or lower classes. Even taxation in proportion to wealth would be, prima facie, an injustice to those more wealthy than average. No, the prima facie case is for taxation in equal absolute amount.

Yet, an additional consideration weighs in. The amount procured by taxation in equal absolute amount would be insufficient for the functioning of modern and developed societies such as ours. Therefore, the matter comes down to this: Either the wealthy prefer to partake in such a society or they don't; it's at their discretion. And if they opt to do so, then as a matter of practical entailment they prefer to pay sufficiently for the functioning of the society and therefore more than the non-wealthy. In addition, the development of the society that makes it possible for people to become wealthy also supports this entailment. If one opts to get wealthy in a society of this sort, then it is because of the development and modernity that one eventually succeeds. So, again as a matter of practical entailment, one prefers to pay by opting to become rich in such a society. So, yes, the case for taxation in absolutely equal amount is defeated when we move from primitive little groups to modern and developed societies. This is the case for progressive taxation.

However, this case is severely limited in power. It holds only to the extent that the functioning of the society is the measure of sufficiency of contribution. The modern welfare state remains excluded by the original prima facie case because it moves well beyond societal functioning. Moreover, there is no good argument that the wealthy ought to provide for the food, housing, healthcare, etc. of the non-wealthy. Rawls's case is the best and it fails.

Therefore, currently the wealthy are required to pay more than their fair share in the U.S., since they are required to purchase a welfare state for the non-wealthy. The position held by many that they ought to pay still more is a non-starter.

This is the case from economic justice in favor of abolishing the welfare state. There are weightier considerations against the welfare state, such as the case from the danger of big, centralized government and the case from the morally corrosive effects of such government. We can consider those cases some other time.