A progressive tax can fit in well with a capitalistic society.A capitalistic society normally has room for a progressive tax because normally any society looks out for those that are less fortunate so that hopefully at one point they can bring themselves up and become a mogul themselves if they put their mind to it.
A progressive tax is better than a flat tax as a progressive tax doesn't give any class of people in society a higher burden in taxes. Those who earn more give more in taxes, and the poor and low-income people pay less in taxes contributing to their well-being in society.
In a society based on money and earning more, it makes sense to come up with a tax system that follows that idea. Those who make more should contribute more. If those taxes are reallocated to help those earning more, rather than helping those in need, the nation could become a true capitalistic society. This does not necessarily sound like an attractive society, but one where values are all aligned.
People in this country are soon going to have a wake-up call. This country cannot continue to operate while cutting taxes. Our government can call it whatever they want to call it. They can call it a progressive tax or whatever. But sooner or later, taxes are going to have to be raised. A progressive tax, in my opinion, is no different than making a balloon payment. I would rather pay a flat tax and get it out of the way. With a flat tax at least we know what we have left.
It is a rare occurrence when someone has risen to prosperity with no public help: public education, financial aid for college, medical assistance, driving on a public road, tax incentives for businesses, police protection, fire protection, etc. All of these are paid for by taxes. If no one paid taxes, the government couldn't keep up the roads and without roads how could one deliver goods if they owned a multi-million dollar retail store?
A progressive tax structure allows those on the lower end of the economic spectrum to have a greater amount of disposable income to spend in ways which help drive a capitalistic society. A deep imbalance between the rich and the poor is actually very harmful to a capitalistic society because it results in a situation where recession is more likely. Besides which there is no intrinsic opposition between progressive policies as an ethical concern and the promotion of capitalism. Rather, the two can be seen as going hand in hand.
A flat tax benefits the wealthy, who already have unlimited benefits in our society based on their wealth. A progressive tax helps put a little burden on those who have so much and allows the government to provide essential services to those who can't afford everything. Capitalism shouldn't just mean that the wealthy deserve everything and the less well off should suffer. This isn't capitalism but rather raw greed and will lead to the downfall of this society if it continues.
Pure capitalism produces incredible disparity in wealth. If the United States were a truly capitalist economy, with no government regulation or intervention, the country would fall apart, because no one would keep in mind the interests of others - pure capitalism doesn't care about others, because it's all about self-interest. Progressive taxation is necessary within a capitalist society to ensure that some element of fairness is maintained. The reality is that many people cannot change their economic situation, no matter how hard they try. Conversely, some people are born into incredible wealth. Because none of us knows beforehand what situation we will be born into, progressive taxation is the fairest system.
A progressive tax increases the tax rate with higher income. The poorest pay the least in this approach. Since the basics for life are the same regardless of income, even with a progressive tax, often the poor are spending a larger percentage of their income on just basic necessities. The very wealthy, in previous times of our country, paid a significantly larger percentage of their income to taxes than they do now - and it never hindered our capitalistic society. Even after the taxes, they had netted a greater amount.
When the government has the ability to tax people based on the importance of the earning capacity of an individual, it will easily relate to capitalism. The capitalism in this sense is capitalizing on people doing well. So it is compatible, based on the idea of what it does, capitalizing.
A progressive tax penalizes individuals and companies that prosper. I support a flat tax rate, as it is progressive in the sense that, as you earn more, you pay more, just not at a higher rate. Progressive tax rates, coupled with the ability to itemize deductions, make our tax system way too complex, and gives people and entities the ability to cheat the system.
Capitalism is a system that rewards hard work and luck. But, what a progressive system basically says is that the more you make, the more you owe to society. On top of that, people who can't or don't work apparently owe nothing to society, and everyone else becomes their steward.
A progressive tax depletes a wealthy person's income to such an extent that it could potentially cause that person to devote less and less time to their work. Overall, this would hurt business and the economy. People would lack the motivation to work diligently. On the other hand, a flat tax would be more appropriate, because every member of society would understand what they would have to pay in taxes.
We live in a capitalistic society and, because of this, people should feel they have a reason to strive for success, instead of being punished because they are doing better then the rest. Many people work really hard to make a good living. By imposing a progressive tax, you will be telling hard working successful people that the time and work they put in was for nothing, because what they worked so hard for will be taken away and given to the more lazy individuals who are on welfare for the thirteenth time, because they find drugs more important than work.
Progressive taxes can be a disservice to the values of a capitalist society, as they penalize those most unable to pay taxes. While, at first glance, the progressive tax system would appear to impact the wealthier more, they are the ones who can afford the accountants, lawyers and lobbyists who give them ready access to breaks and loopholes that allows them to evade paying their fair share. A flat tax will have products taxed at their value, so there is less chance of evasion.
Currently, the lowest federal tax bracket in the U.S. is 10%, and the highest is 35%. This means that the more you earn, the more tax you have to pay percentage-wise. In other words, earning more results in diminishing marginal returns after accounting for taxes. In my opinion, a capitalist society shouldn't charge progressive taxes.
The nature of a capitalistic society is to inspire business and incentivise hard work. A progressive tax does neither, but instead imposes increased burdens on business as it becomes more successful. If a company is trying to survive, but has to accommodate new tax burdens because of its current successful status, they will 1)Raise their prices, and/or 2)Reduce their number of employees. This, in effect, creates a stagnant economy, which is counter-productive to the goals of capitalism.
The Laffer Curve found that the optimum income tax rate was between 10 and 20 percent. At higher rates, income producers seek ways to minimize taxes. Above 40%, and the effort becomes to avoid taxes. Above 50%, it is not worthwhile to work all day to keep less than half a day's wages. Productivity then crashes as people go galt - the price of work is too high.
Progressive taxation stifles business. Taxation is very complicated, though, and where progressive taxation might be a factor in business decisions, there are many other factors that may very well encourage the business to grow. Individuals, also, have the same considerations with decisions that would better them and their families. Any one factor does not dictate major financial decisions.