'Progressive' as used in the same context as your original post is basically a placeholder for 'benefiting the groups I care about'. It's not a meaningful word to use, and you even know that. Contrast with 'progressive tax', which is well-defined.
I don't understand the line of thinking which effectively says "people don't want to earn £2 if they have to pay £1 in tax". Erm, you're still richer than you were if you didn't earn more. The only possible argument against this is if earning another £100k takes more amount of effort it took to earn your first £100k. But if you know anything about making money it doesn't work that way. With more capital comes greater opportunities. You can afford an accountant to manage your money, you have more investment options, and so forth; and you still have enough to spare for a comfortable lifestyle.
A flat tax implies that a dollar is worth just as much to Warren Buffett as it is to someone flipping burgers, which demonstrates a complete lack of perspective.
Put it this way: everyone's living expenses are, say, £12k. now if you're earning a median wage that leaves you £10k to invest how you like. If you're earning £50k you get to invest £38k. assuming the schemes offer the same rate of return, guess who is going to amass £50k first? Hint: it's not the guy who has to get a 5x return on his investment.
The higher rate income tax is an incentive to invest the money you receive back into the economy via business or charity, where it is taxed at a lower rate or even not at all, rather than spent on your own personal gain. Why should it scare you that the government would take that money? BTW, investment in financial instruments of dubious benefit is giving money to the financial system (this should really be obvious...) so it does contribute to the economy, but there are almost certainly better ways to do so.
The problem with the libertarian perspective is that it irrationally assumes the best of people when there is no incentive for them to do so. If a billionnaire can afford to fund all the services he requires that someone on the poverty line would depend on government for, why should the billionnaire give his money away? If you want a society you have an obligation to provide for one, if you believe it is unfair that someone with broader shoulders should carry more weight, then perhaps you should consider how fair it is that he has broader shoulders and others do not.
> The problem with the libertarian perspective is that it irrationally assumes the best of people when there is no incentive for them to do so.
I assume no such thing about people regardless of whether they are rich or poor.
I think crux of our disagreement is about the involvement of government in peoples lives. I heard a quote recently, "The more the government tries to do the less well it does everything", I might have mangled that slightly.
Your supposition is that we need the government to force us to be nice and act in a way that is beneficial to society, if so isn't that a losing proposition from the outset?. Who is the moral arbiter here?, I would really like to minimize the amount of situations where government passes judgement on its citizens.
What I am really against is mob rule, the state is a necessary evil, a large state is a larger evil.
I am convinced that while the last century's politics was dominated by left versus right, this century will be dominated by authoritarian versus libertarian. The world isn't black and white, in certain situations we can't avoid making those kind of judgements but where we can avoid it we should.
> I think crux of our disagreement is about the involvement of government in peoples lives.
The involvement of government in particular does not concern me.
My concern is the involvement of any powerful group.
If all you seek is a reduction of the state, you leave a void waiting to be filled by corporatocracy.
The argument of left vs. right, authoritarian vs. libertarianism is a red herring, what really matters is the distribution of power. Given that money is approximately power and that the government is more accountable to me than an individual, I have no qualms about the higher tax rate.
We are probably in agreement with regards to your last statement.
I think one of the major themes of politics to come will be the separation of business and state (much like how America pioneered the separation of church and state).
This will require a shift in society though, most voters see it as the governments job to manage the economy and help it grow. But corporate welfare is as damaging to business as social welfare is to individuals.
This is unfortunately a very gray area, at what point do tax breaks stop "encouraging" business versus at what point do businesses become dependent on them?. The inequality is what bothers me most, small businesses paying a higher percentage of tax than big businesses, the percentage should be the same.
I don't believe we can get there by regulation alone, citizens have to care as well, although I do concede that regulation may be necessary to a certain extent.
> if earning another £100k takes more amount of effort it took to earn your first £100k.
That's not the issue. The issue is that the 2nd 100k is worth less in terms of happiness than the first.
Various studies have shown that after around 80,000 peoples happiness is proportional to the amount of money they earn, and after that it levels out.
Thus if one didn't really care too much about that 2nd 100k, making it merely 50k might just be enough for the person to throw up their hands and say "its not worth it, I'll spend the weekends at home instead of at work".
I don't understand the line of thinking which effectively says "people don't want to earn £2 if they have to pay £1 in tax". Erm, you're still richer than you were if you didn't earn more. The only possible argument against this is if earning another £100k takes more amount of effort it took to earn your first £100k. But if you know anything about making money it doesn't work that way. With more capital comes greater opportunities. You can afford an accountant to manage your money, you have more investment options, and so forth; and you still have enough to spare for a comfortable lifestyle.
A flat tax implies that a dollar is worth just as much to Warren Buffett as it is to someone flipping burgers, which demonstrates a complete lack of perspective.
Put it this way: everyone's living expenses are, say, £12k. now if you're earning a median wage that leaves you £10k to invest how you like. If you're earning £50k you get to invest £38k. assuming the schemes offer the same rate of return, guess who is going to amass £50k first? Hint: it's not the guy who has to get a 5x return on his investment.
The higher rate income tax is an incentive to invest the money you receive back into the economy via business or charity, where it is taxed at a lower rate or even not at all, rather than spent on your own personal gain. Why should it scare you that the government would take that money? BTW, investment in financial instruments of dubious benefit is giving money to the financial system (this should really be obvious...) so it does contribute to the economy, but there are almost certainly better ways to do so.
The problem with the libertarian perspective is that it irrationally assumes the best of people when there is no incentive for them to do so. If a billionnaire can afford to fund all the services he requires that someone on the poverty line would depend on government for, why should the billionnaire give his money away? If you want a society you have an obligation to provide for one, if you believe it is unfair that someone with broader shoulders should carry more weight, then perhaps you should consider how fair it is that he has broader shoulders and others do not.