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Argument: Progressive taxation reduces the savings rate in a society

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Supporting quotations

Friedrich A. Hayek. "Taxation and Redistribution". The Constitution of Liberty. 1960 - "the very serious effect of progressive taxation on the supply of savings. If twenty-five years ago the argument that savings were too high and should be reduced may have had some degree of plausibility, few responsible persons today will doubt that, if we are to achieve even part of the tasks we have set ourselves, we want as high a rate of saving as people are prepared to supply. The socialist answer to those who are concerned about this effect on savings is, in fact, no longer that these savings are not needed but that they should be supplied by the community, i.e., out of funds raised from taxation. This, however, can be justified only if the long-term aim is socialism of the old kind, namely, government ownership of the means of production."

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