The retrogression of progressive tax policy

The earliest known tax was paid in the form of livestock and dates back 4500 years in ancient Mesopotamia. Individuals such as merchants paid tolls and duty fees with sheep and cows. Today, people are subject to pay different types of taxes such as Income tax, sales tax, property tax, estate tax, etc. It is part of our regular life and while some just chose to go along with it, others question the need to pay fees on every single transaction, most importantly income taxes. The United States, like many other countries across the globe, utilizes a Progressive tax system, in which the tax rates increase as the taxable amount increases. In theory, this seems functional as it makes sense to charge higher taxes to the individuals that earn a higher income while those than make less pay lower tax rates. Lest set aside factors such as living standards so we can pose the following question: What incentive would a person have to work more if he or she will in turn pay more on taxes? Today, taxes are a necessary evil since these are used to pay for public servants and services but why must we use a progressive tax system? 

Friedrich Hayek's opinions about the Progressive tax systems are polemical as he describes it to be against an open and liberal society. In his book "The constitution of Liberty " he says the following: "If a reasonable system of taxation is to be achieved, people must recognize as a principle that the majority which determines what the total amount of taxation should be must also bear it at the maximum rate". This is in part a proportional tax system. One in which regardless of how much income individuals earn they pay the same percentage. Why would people reject this tax policy? Well, no one would like to individually pay more when this means making less if you are already earning a low income, but it would create an incentive to increase earning in prospects to earn every penny over the max tax requirement. One of the unintended consequences of progressive tax policy is the increase in inequality. Large companies and the owners who are already affluent have no issues in handling the tax rates while the individuals who seek to be successful must pay the price of increasing capital and wealth. One of the most important things to consider is the disruption of economic justice in the form of "equal pay for equal work." In the progressive tax system, an individual who works more than his or her colleges would make more money overall, but his efforts and time would be worth less with every extra hour of work. Within the same realm of diminishing return is the disinterest of people to make any capital investment based solely on the added cost. 

In conclusion, a progressive tax system is functional in theory, but it is detrimental to the overall society's progress. It inadvertently fuels inequality by placing a financial burden on people from the minimum wage worker making overtime hours to entrepreneurs seeking to expands their businesses. The increasing rates affect all socio-economic tiers except the elite and ultra-wealthy. When thinking on the aspect of liberty, progressive tax policy is detrimental for individual growth and one’s ability to maximize wealth. A proportional tax system is not exactly appealing to the average person as it is perceived to take more of one's income, but it facilitates financial growth in the short and long term, unlike progressive tax. Regardless, taxation is after all a necessary evil needed to pay for public services, but its' form of financing should be one that results in a better return on investment than the one we have today.