Kip Hagopian says no. He considers various arguments in favor of progressivity and isn’t persuaded. I appreciate Hagopian’s attempt to engage these arguments. Unfortunately, he says little or nothing about the three I find most compelling.
1. Luck. Many of the things that determine our incomes — intelligence, creativity, physical and social skills, motivation, persistence, confidence, connections, discrimination, occupation, employer, spouse, inherited wealth — are in significant measure a product of chance. They are heavily influenced by genes, our parents, our childhood neighborhood and schools, timing, and various fortuitous occurrences. Opponents of progressive taxation often emphasize the role of effort, but much of the variation in effort is itself a product of luck. (Progressive tax proponents sometimes fall into the trap of accepting the distinction between effort and luck; they’re then forced to argue that the latter matters more than the former.)
2. Ability to pay. Higher-income households tend to be able to pay not only more dollars but also a larger share of their income without suffering. One sign that this is true is that the savings rate increases with income; those with higher income tend to save a larger percentage. This may owe partly to a stronger future-orientation, but it’s mainly because they can afford to.
3. Income tax progressivity helps to offset the regressivity of other taxes. Some taxes are regressive, with higher-income households paying a smaller share of their income than lower-income households. Payroll (Social Security) and consumption (sales) taxes are the most prominent. If income taxes weren’t progressive, the tax system as a whole would be regressive.
Fairness is not the only criterion by which a tax system should be judged. We also need to consider how much revenue we want to raise and taxes’ impact on the economy. For my thoughts, see here and here.