What Are Some Advantages and Disadvantages of a Progressive Tax?

There are many advantages and disadvantages to a progressive tax. The arguments for a progressive tax emphasize the way it allows government to raise greater revenue without overburdening low-income members of society. Detractors of a progressive tax assert that the policy discourages people's entry into high-paying careers and encourages dishonest activity on the part of people trying to evade the tax.

According to the Library of Economics and Liberty, a progressive tax raises the percentage of taxable income in proportion to a taxpayer's earnings. Many countries favor this method of taxation because it eases the tax burden on low-income households, while still providing the government with enough revenue to perform all its functions.

However, there are many objections to a progressive tax. The Library of Economics and Liberty states that a progressive tax creates a complicated tax structure. Wealthy individuals take advantage of this and manipulate loopholes in the tax code. High-earning people even go overseas to avoid paying high progressive taxes. This leads to both job losses and decreased tax revenue. A progressive tax discourages people from entering high-paying professions. This leads to higher wages in these professions, an overstatement of tax burden and a consequent rise in the price of the goods and services these professions offer.