Quora Answer: Why Do Poor People Complain That the Rich Pay Less Taxes Than They Do?

The following is my answer to a Quora question: “Why do poor people complain that the rich pay less taxes than they do?” 

They complain about this because it is true.  In any developed economy, the rich pay far more in taxes than the poor by quantity.  However, as a percentage of their income and wealth, the rich pay far less.  There is no way around this system because governments have to be practical. 

From a government perspective, we want to give the masses enough that they are tied to the economy, and grow with it.  This grows the tax base, creates the foundation for stability, and enfranchises the people.  Disenfranchised people in large numbers tends to lead to regime change, conflict, and a refugee problem.  When people feel that they have no stake in the system, they are not obliged to support it. 

The wealthy elite, however, is where the government truly gets much of its funding directly and indirectly, through taxes, production, and direct funding.  They have the connections and the wealth to acquire expertise on how to best manoeuvre in any system.  And when they are no accommodated, they leave and move their tax domicile to a more favourable climate.  The balance here is on taxing them adequately for them to stay, but not so much that the cost benefit of moving elsewhere compels them to do so. 

As a result of these considerations, tax systems eventually evolve to tax the masses based on their gross earnings, and the wealthy on their net earnings.  The wealthy, however, are indirectly taxed through their political contributions to causes.  Taxes work when the populace understands that this is the cost of the upkeep in society, and a well-managed revenue stream for the government is an investment into society.  They breakdown when people do not see that benefit, and tax evasion becomes a way of life.