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Argument: Progressive taxes do not necessarily decrease income inequality

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Supporting quotations

Friedrich A. Hayek. "Taxation and Redistribution". The Constitution of Liberty. 1960 - An even more paradoxical and socially grave effect of progressive taxation is that, though intended to reduce inequality, it in fact helps to perpetuate existing inequalities and eliminates the most important compensation for that inequality which is inevitable in a free-enterprise society. It used to be the redeeming feature of such a system that the rich were not a closed group and that the successful man might in a comparatively short time acquire large resources .Today, however, the chances of rising into the class are probably already smaller in some countries, such as Great Britain, than they have been at any time since the beginning of the modern era. One significant effect of this is that the administration of more and more of the world's capital is coming under the control of men who, though they enjoy very large incomes and all the amenities that this secures, have never on their own account and at their personal risk controlled substantial property. Whether this is altogether a gain remains to be seen.

It is also true that the less possible it becomes for a man to acquire a new fortune, the more must the existing fortunes appear as privileges for which there is no justification. Policy is then certain to aim at taking these fortunes out of private hands, either by the slow process of heavy taxation of inheritance or by the quicker one of outright confiscation. A system based on private property and control of the means of production presupposes that such property and control can be acquired by any successful man. If this is made impossible, even the men who otherwise would have been the most eminent capitalists of the new generation are bound to become the enemies of the established rich.

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