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Tax Tyranny

Pascal Salin

Tax Tyranny does not aim to give a description of existing tax systems, rather it provides readers with the intellectual instruments which enable them to understand the role of taxation in the workings of economic systems and to evaluate the fairness of taxes.
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Chapter 2: The myth of progressive taxation

Pascal Salin


Progressive rates of taxes are considered fair by many people because they mean that those who have more have to pay more. It is already the case when taxes are proportional (for instance to incomes), tax rates are then the same for all taxpayers. Progressive rates mean on the contrary that there is no an equality of rates between all taxpayers, which must be considered unfair. Progressivity of tax rates must not only be considered unfair, but also harmful (and it may be harmful because it is creating unfair inequalities). In fact, progressivity is destroying productive incentives and punishing particularly those who are the most able to create economic resources, for instance by working a lot, by being great innovators, or by taking charge of economic risks. As all people are complementary in production, all suffer from a tax system which is destroying the productive incentives of some of them, particularly those who contribute the most to production.

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