The Case for Progressive Taxation: Who Benefits Most from Public Policies?

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One of the enduring debates in normative political philosophy concerns the fairness and structure of taxation—particularly, whether the tax code should be progressive, taxing higher incomes at greater rates. Progressive taxation is the idea that those with higher incomes should pay a larger percentage of their income in taxes than those with lower incomes. Historically, the United States has embraced this principle, although the degree of progressivity has varied over time.

A Historical Perspective on U.S. Tax Progressivity

During the mid-20th century, the U.S. income tax code was markedly progressive. For example, in the 1950s, the top marginal tax rate on income above $200,000 (roughly equivalent to $2.5 million today) was 91%. This meant that the wealthiest Americans contributed a significant share of their income to public revenues. By contrast, as of 2023, the top marginal federal tax rate is 37% on incomes over $578,125 for individuals, reflecting a significant decrease in progressivity.

Additionally, research has shown that, in recent decades, the overall U.S. tax system has become less progressive. When factoring in payroll taxes, sales taxes, and other regressive tax mechanisms, some studies suggest that high-income earners, in practice, pay a smaller percentage of their total income in taxes than middle- or lower-income earners. A 2021 analysis by the Council of Economic Advisers (CEA) and the Office of Management and Budget (OMB) found that the wealthiest 400 American families paid an average federal individual income tax rate of 8.2% from 2010 to 2018. This decline in progressivity has sparked calls for reforms ranging from raising top marginal tax rates to implementing flat taxes.

Arguments for Progressive Taxation

One compelling argument for progressive taxation is that government actions disproportionately benefit those with greater wealth. Take disaster relief and firefighting, for example. When a state invests resources to fight wildfires, the primary beneficiaries are property owners. Wealthier individuals, who often own larger homes and more valuable assets, have the most to lose in a disaster. The same principle applies to government investments in flood mitigation, hurricane recovery, or earthquake preparedness. These actions protect property, but they do not benefit renters or those without property in the same way.

This disparity is even more pronounced at the federal level. Programs designed to stabilize the economy—such as bailouts for financial institutions, stock market protections, or banking regulations—disproportionately benefit those with retirement accounts, investments, or substantial savings. Similarly, funding for the U.S. military, which defends the nation’s territory and economic infrastructure, protects the accumulated wealth of high-income earners far more than it does individuals with minimal assets.

Fairness and Public Responsibility

From this perspective, progressive taxation is not merely about redistributing wealth; it is about ensuring that those who benefit most from public policies contribute proportionately to their costs. While a flat tax rate might seem simpler or fairer on the surface, it overlooks the unequal distribution of benefits that government services provide.

Take firefighting again: a homeowner with a $10 million estate protected by public fire services clearly has more at stake—and thus a greater obligation—than someone living paycheck to paycheck in a rented apartment. The same logic applies to federal efforts to stabilize markets, protect investments, and manage economic crises. Those who stand to lose the most should shoulder a proportionate share of the burden. Progressive taxation is not just a matter of fairness; it is a rational response to the unequal distribution of benefits from government action. Those with more wealth have more to protect and more to gain from public policies, and they should contribute accordingly.

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