[pash]

> If the poor pay more of a tax than the rich as a percentage of their income or wealth, then the tax is regressive. Otherwise, it is progressive. The word regressive is used to describe the incidence of a tax on a population.

Although this is effectively the definition of progressive and regressive taxation today—because that's how the terms are almost always used by the large number of people who have only the most casual understanding of tax policy—it is a perversion of the original and long-standing textbook definition, and of the way in which the terms are still used by some economists.

By the original definition, a progressive tax is simply one whose rate of assessment increases ("progresses") with the value subject to taxation [0]. Thus an import duty on bananas is progressive if it taxes them at a rate of 1% ad valorem for the first $1MM's worth, and then at a rate of 2% of their value above $1MM.

Note that the original definition and the popular corruption coincide when the thing being taxed is a person's income. (Together with the mistaken association with "progressive" politics, this seems to be the source of the perversion of meaning.) But the two definitions often differ, and the term "progressive" in the context of taxation originally had nothing to do with how the burden of taxation is distributed across society.

0. This is also the definition given in the Wikipedia article, https://en.m.wikipedia.org/wiki/Progressive_tax (and given by several of the cited sources), although much of the article anyway discusses the burden-of-taxation interpretation.

[ppereira]

This is an interesting generalization of my use of progressive/regressive. However, I would not go so far as to say that my definition is a "popular corruption". My restricted definition is frequently applied in the tax law, tax policy, and tax economics literature.

According to the OED, the earliest noted use of "regressive" in the context of taxation is from Richard T. Ely's writings on political economy in 1891. He was the leader of the progressive movement. His use of the terms progressive/regressive would certainly have meant reform/acting in a backward direction.

Do you have an earlier citation for your definition? I wonder if it is in fact a mathematical generalization of a progressive/populist definition.

[pash]

Yes, I recognize that the definition you gave is far and away the most common one, even among policy wonks. The original definition seems still to have currency mostly among economists.

But the definition I gave is indeed the original one, and it is not a generalization. A tax may be progressive in your sense but not in the original sense: a luxury tax on yachts, for instance, is progressive in your sense, but not in the original sense if it is assessed at a fixed rate [0].

The OED's first noted usage is way off, by the way; it is easy to verify that the term progressive in the context of taxation pre-dates the Progressive Era by at least a century. For instance, Thomas Paine proposed progressive taxes on estates (using the term numerous times) in his Rights of Man (1791). (He even drew up tables of suggested taxes, the rates of which rose with the value of the estate.) There are more commonplace examples from the first half of the nineteenth century that you can find on Google Books, including several that disambiguate the two senses in favor of the original definition I provided [1].

A great many of the early mentions of progressive taxes, including of those before the Progressive Era, do come in the course of discussing how to make taxation fairer (in the author's view) or how to disperse inherited wealth. Since the rich own more wealth, buy more goods, and have greater incomes than the poor, progressive rates of taxation—in the original sense—tend to result in progressive taxes—in the other sense. I suppose the shift in meaning was to be expected.

0. Unless perhaps yacht is defined as an expensive boat. But the point stands: so long as there exist goods that the rich spend a higher proportion of their income on than do the poor, then a tax assessed at a fixed rate on those goods is progressive in your sense but not in the other.

1. There are also some examples, mostly in tables of import duties, where the terms progressive and not progressive are used in a sense that appears to distinguish duties that are assessed ad valorem versus those that are assessed as a flat fee; so it seems that progressive sometimes also meant merely that the amount of tax collected increased with the value subject to taxation, which is further distinct from our debate over progressive rates.