Posted 5 years ago on Oct. 12, 2011, 11:22 p.m. EST by TruePatriots
from San Diego, CA
This content is user submitted and not an official statement
Say Person A makes $20,000 and Person B makes $200,000 if both pay a 10% income tax Person A pays $2,000 and Person B pays $20,000. Under a progressive tax system Person A would have paid 5% income tax for a total of $1,000 and Person B would have paid 20% income tax for a total of $40,000. For Person A that $1,000 was the difference between paying for food or clothing while Person B it was the cost of vacation. [Economics terminology would be utility, the satisfaction one gains from the consumption of a good] So, for Person A he has a higher utility on those $1,000 dollars while Person B has a lower utility for his $20,000 taken because as we accumulate more money extra extra dollar means less to us.
In essence, Person A is taxed more because he valued his $1,000 more than Person B valued his $20,000.
[I made up the tax brackets for this hypothetical case]