U.S. Treasury - Fact Sheet on the History of the U.S. Tax System
Though social policies sometimes governed the course of tax policy even in the early days of the Republic, the nature of these policies did not extend either to the collection of taxes so as to equalize incomes and wealth, or for the purpose of redistributing income or wealth. As Thomas Jefferson once wrote regarding the "general Welfare" clause:
To take from one, because it is thought his own industry and that of his father has acquired too much, in order to spare to others who (or whose fathers) have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, "to guarantee to everyone a free exercise of his industry and the fruits acquired by it."
It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
Progressive taxation is needed for 2 primary reasons
1) Lower income people spend a far higher proportion of the money on consumer spending, which is the primary driver of our economy.
2) Lower income people tend to spend most of their money on basic needs and lowering their income would have a significant impact on social stability.
Fairness, in either income earned or taxation is a pipe dream. With an all-so fair flat tax, it still runs into issues with how to treat capital gains, inheritance, and income earned overseas.
In short, you are wealthy because you depend upon much of what the govenment provides you by helping you get weathy and protecting it.
I liked the arguments presented at the beginning of this thread for a flat tax better than I do the fairness concern. I think there is truth to the claim that wealthy people benefit more from a lot of what governemnt does to help them accumulate weallth. Government has often been quite supportive of the wealthy and big business. We spend far more money on helping them than we do the poor. Investigate corrporate welfare sometime.
In any case, I prefer arguments concerning the good of the country over fairness for the wealthy, who I don't believe are being mistreated.
Just saying . . .
AUSTAN GOOLSBEE: I think the world vests too much power, certainly in the president, probably in Washington in general for its influence on the economy, because most all of the economy has nothing to do with the government.
The poor spending a higher percentage of their income on consumer spending really is irrelevant because that spendin is offset by higher deficits and greater use of public services by these same people. No one can tell me that people making 50,000 and less cannot afford something in the form of taxes.