Before I start, I should just clarify the definitions of progressive and regressive taxing
- Progressive: Redistributing wealth from the rich to the poor through taxation of the rich providing state services for the poor
- Regressive: Redistributing wealth from the poor through taxation of the poor to provide state services for the rich (Just like the picture above)
-------------------------------------------------------------------------------------------------------------There is a common myth in society that many governmental programmes are based around the idea of taking from the rich and better off in life and giving back to the poorer, less well off in life.
Most governmental programmes are sold on this very idea, in my view, the only way they can sell an idea to the public. Who would vote for a programme that takes from the poor and gives to the rich?
Governmental programmes invariably take from the poor and very rich and give to the middle income class.
This is based on the way that governments are formed and who they should provide for.
There are made up of 51% vote from lower middle class to upper middle class and they provide for them.
Why not the top 51 %?
If you are providing for the top 51% you would be including the interests of the super rich for only a few votes, therefore you would be sacrificing a large share of tax from these people in order to obtain a small number of votes. Therefore this would not be effective.
Why not the bottom 51%?
Forming a government based on the bottom 51% would not work because the people in the bottom 51% include the people that don't require the skills needed to run a government, the skills such as being literate, having a good education etc... the lack of skills that leave them at the bottom of the economic scale (Whether it be an unfortunate start in life economically, unfortunate enough to be born with a handicap which affects productivity, poor entrepreneural capacity etc... )
This leaves the government being made up of the middle 51% (lower - upper middle class)
This is because these are the people that have the skills, these are the people that have gone to university and also are not cost effective in terms of sacrifising their vote (unlike the rich)
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The best example of a tax being sold as progressive but in reality is regressive.
State subsidised higher education. (University)
University is highly subsidised in the United Kingdom (Despite the price being hiked in recent years).
This is sold on the fact that you tax the society (whereby the richer pay more) but you provide a subsidised service that allows anyone of any class to attend. Whether you are poor and have paid little into the system or are rich and paid lots into the system.
However what is the reality?
The reality is that the people that use these services are prodominantly those from the middle classed families. Whilst the poor pay a smaller amount into the system towards education they take much less from this service, also the rich pay much more for this service however their numbers of attendance does not justify the amount they pay. Therefore who wins? The middle class. The middle class that wins the vote in the UK/US. The middle class that makes up the government in the UK/US.
Here are some figures to show the participation rate in the UK.
Here you can see that the middle class makes up 75% of the University participation rate in the UK.
Whilst the lower class makes up only 10% of university participation.
This means that every person at the lower end of the economic scale is paying for middle class higher education to enable them to become more productive and earn a higher wage.
Not a very progressive governmental programme if you ask me.
