Max Sawicky wrote, > But suppose it is the ratio of net of tax income? > In Walker's example, the ratio changes from > (9/8)*(rich inc/poor inc) to (91/82) * (rich/poor). > The latter is smaller, which could be taken to > mean "more" progressivity. Or less inequality. The dictionary definition Roger gave didn't say anything about the ratio of net of tax incomes nor did it say anything about the ratio of changes in rates. The principle of progressive taxation was introduced in economics, I believe, by Boisguilbert from the perspective of the revenue collecting state. Boisguilbert argued that revenues would be more bountiful and less oppressive if taxes were assessed according to the ability to pay. The ratio of net of tax incomes Max brings up is a secondary effect, but as Max's example shows, one doesn't need a progressive tax rate structure to lower the ratio. Whether a lower ratio of after tax incomes is "progressive" in some other sense is a question I won't go into. It is not progressive taxation. > Since in the after-tax case the two are getting > the same electricity, while the ratio of rich > after-tax to poor after-tax has declined, it > is reasonable to say a rate cut is progressive > because the result is "more" progressive I assume Max means the two are consuming the same amount of electricity as before -- which is only the ceterus paribus assumption. It could be that the change in rates also changes the consumption patterns, depending on the elasticities of demand. The two are NOT "getting the same electricity" in the sense of the wealthy and poor customer consuming the same amount as each other. I repeat, progressive taxation has to do with rate structures, not the ratios of after-tax income. To extend the label of progressive to the latter is to argue by analogy, but the analogy is flawed. The progressivity of the rate structure is FROM THE PERSPECTIVE of the revenue collecting state, which is a single entity. The analogical "progressivity" of after-tax incomes is from the separate perspectives of the rich and poor consumers. Thus to label the latter "progressive" is to impose an interpersonal comparison of utility. It is a violent simplification of a much more complicated case. Progressive taxation is a simple matter of arithmetic. Progressive second order effects is not. The Tricky Devil
