When you talk about capitalism, you're talking about the government taking over the people. In that society, the government would prefer not to have wealthy people because they are in control of themselves. A progressive tax favors the poor, seeing as it goes off of your income. So, if you bring in very little, you're rewarded with refunds and very little of your income being paid out in taxes. If you're wealthy, you're paying out a lot more in taxes and you're told it's your job because you make more than others, it's only fair. Fair would really be everyone paying out the same amount, so everyone would pay 10% for example. The poor would still be paying less, the wealthy would still be paying more but at least one party wouldn't be responsible for the other. In a capitalist society, the government would "take care" of everyone, so we would all be dependent on them to get by. Which is what's happening in the lower class right now.
To me progressive tax is the basis of capitalism in the tax world. The larger companies succeed more and as a result owe more in their share. The smaller companies face more struggles but are not expected to pay as much since they are not doing as well. Progressive tax goes hand and hand with capitalism.
Progressive taxation is absolutely compatible with capitalism. You make more, you pay more. That's also how it works in capitalism -- the more there is, the more it costs. Understandably, there are always complaints about any kind of taxing system. It's human nature to want to keep what we think is ours.
There is no reason why a progressive tax would not be compatible with capitalism. It might not be in the spirit of capitalism, but a state could have a progressive tax and yet still maintain an overall capitalist economic system. The only way such a tax would conflict with capitalism is if the rates on higher income were so extreme as to discourage economic activity.
All you need do is look at the posting in the left column of this debate and you can see how the model fails. According to the first poster it Seems, it is only fair that people not working to improve their situation be constantly carried by those that are. And those that have sacrificed all their lives to work hard, get educated and compete long hours to improve their status should assume it is their job to continue to do so so they can ensure those that don't want to do those things can still benefit off the backs of those that have.
I am ok with the old code which did take more from those that had it and less from those that don't have. But it has gone too far. Socialism has proven to fail everywhere. We were the strongest country, we are headed for weakness. Because, a progressive tax code kills the middle class and the opportunities for those that want to work to improve their status in life. Only people that haven't sacrificed and done the long hours, haven't denied themselves the short-term pleasures in exchange for higher long term goals think it is "only fair" to sponge off the hard working.
I started with nothing, worked and sacrificed for years. Skipped the golf outings on Fridays, or Sundays to either finish school or advance my earning potential. While others I know always made sure they skipped education or work for the fun times. And now they want more of my money that I earned? That is not fair, because nobody can give me back what I sacrificed to get where I am financially.
I give to charity and I am ok with paying a higher tax rate, but enough is enough. When someone that pays in 350 in taxes gets 1400 back that is wrong. Or when you have generational welfare that sees an advantage to having another government dependent off-spring as a means to improve their income that is wrong. We are creating a culture of takers and there are fewer and fewer that can close the widening gap of money required to compensate for dead beats.