[Procrastinational]

Fun fact about progressive income taxes...

While a flat tax certainly has its merits, one disadvantage is that it doesn't have the same stabilizing effect a progressive tax has during economic slumps, or at least not to the same extent.

During an economic slowdown, incomes obviously tend to fall, and when incomes fall under a progressive system, people get pushed into lower brackets, reducing not just their absolute tax payments, but also the tax they pay as a percentage of their income. This means a lower reduction in saving/consumption than if people didn't fall into lower brackets, which can decrease the severity of a recession.

When the brackets are designed well, a progressive tax reduces the tax burden during economic troubles (and also has the effect of increasing it during economic booms when people are more capable of paying).

While a flat tax with a personal deduction is also progressive, a similar drop in income doesn't produce as large of a drop in the overall income tax rate being paid.


This doesn't necessarily mean Alberta should reinstate a progressive income tax system, but it's certainly food for thought. A PST would probably be more effective in stabilizing revenue anyway.





Also... Progressive taxes don't necessarily penalize success because the rich often benefit more from certainly public services than the middle class or poor, so it is logical that they pay more. For instance, the rich benefit much more from an efficient police system because they have far more in assets to lose in case of theft/etc. The same applies to fire protection, etc.
Plus there's the fact that chances are the extra marginal income the rich get back from a flat tax system is probably going towards things like a second home or a second Bentley. There are far more efficient and/or desirable uses for capital. I'm not talking about redistributing wealth here, I'm talking about the tax burden. Taking money from groups to give to other groups just makes people upset. It's more agreeable for both groups when the money they pay is instead used for projects and services that everyone can use.