Pubey
Guest
There are lots of arguments as to why a progressive taxation system is fair (and lots of counter-arguments).
If you believe that the happiness (or utility) that you gain from moving from £20k to £21 k is bigger than the happiness you gain from moving from £200k to £201k, then a progressive system is fairer (at least, in a utilitarian sense). These theories have been tested and are reasonably robust - the diminishing marginal utility of income.
Also lower taxes for the less wealthy are said to be a better way to stimulate demand than a tax break across the board. This is because the marginal propensity for people to consume falls as their income increases (instead of purchasing goods and services with all their pay, they save it or invest it).
Wiki has a good summary of the pros and cons:
http://en.wikipedia.org/wiki/Progressive_tax#For_implementation
If you believe that the happiness (or utility) that you gain from moving from £20k to £21 k is bigger than the happiness you gain from moving from £200k to £201k, then a progressive system is fairer (at least, in a utilitarian sense). These theories have been tested and are reasonably robust - the diminishing marginal utility of income.
Also lower taxes for the less wealthy are said to be a better way to stimulate demand than a tax break across the board. This is because the marginal propensity for people to consume falls as their income increases (instead of purchasing goods and services with all their pay, they save it or invest it).
Wiki has a good summary of the pros and cons:
http://en.wikipedia.org/wiki/Progressive_tax#For_implementation