My latest piece at the American Institute for Economic Research discusses the particularly harmful impact progressive income taxes have on productivity and the poor.
Through the analytical framework of marginal analysis, we can deduce that progressive tax rates create an outsized disincentive to additional work or productivity by levying a steeper penalty on additional earnings that are generated by workers making increasingly costly sacrifices to their leisure time.
“In sum, “progressive” taxes impose a particularly strong disincentive for more productive work. Depriving the economy of greater productivity curtails the alleviation of poverty, and as a result disproportionately harms the poor.“
While the article is addressing Joe Biden’s proposed tax hikes, the argument can equally be applied to Gov. Roy Cooper who, in his budget proposal, would bring back higher and progressive personal income tax rates.
