One stock argument against increasing taxes on the rich to address income inequality is a disincentive argument. The gist of the argument is that if taxes are raised on the rich, they will lose the incentive to invest, innovate, create jobs and so on.  Most importantly, in terms of income inequality, the consequences of this disincentive will have the greatest impact on those who are not rich. For example, it has been claimed that the job creators would create fewer jobs and pay lower wages if they were taxed more to address income inequality. As such, such a tax increase would be both harmful and self-defeating: the poor will be no better off than they were before (and perhaps even worse off). As such, there would seem to be good utilitarian moral grounds for not increasing taxes on the rich.

Naturally, there is the question of whether this disincentive effect is morally justifiable. If the rich retaliated from spite, then the moral argument would fall apart. While there would be negative consequences for such a tax increase, these consequences would be harms intentionally inflicted. In this scenario, not increasing taxes because of fear of retaliation would be morally equivalent to paying protection money so that criminals do not break things in one’s business or home. While there could be a practical reason to do this, the criminals would be acting immorally.

If the rich responded not from spite but because the tax increase was an unfair burden inflicted upon them, then the ethics of the situation would be different. To use an obvious analogy, if wealthy customers at a restaurant were forced to pay some of the bills for the poor customers, it would be hard to fault them for leaving smaller tips. While the matter of what counts as a fair tax is controversial, one approach would be to define unfairness in terms of the taxes cutting too much into what the person is entitled to based on their efforts, ability and productivity relative to what they owe the country. This seems reasonable in that it provides room for debate and does not beg any obvious questions (after all, the amount one owes one’s country could be nothing).

Interestingly, the fairness argument would also apply to workers in regard to their salary. When a worker produces value, the employer pays the worker some of that value and keeps some of it. What the employer keeps can be seen as analogous to the tax imposed by the state on the rich. As with the taxes on the rich, there is the question of what is fair to take from workers. Bringing in the disincentive argument, if it works to justify imposing only a fair tax on the rich, it will also do the same for the less rich. So, those who argue against raising taxes on the rich using the disincentive argument should also accept that workers should be paid in accord with the same principles used to judge how much income should be taken from the rich.

The obvious counter to this approach is to break the analogy between the two situations: this would involve showing that the rich differ from other people in relevant ways or that taking income by taxes is relevantly different from taking money from employees. The challenge is, of course, to show that the differences really are relevant.