Should the rich be taxed more heavily than the rest of society? Yes. Why? If they don't get taxed, then they'll have all the more money to invest in the economy which will create more jobs right? Maybe. The argument about taxation of the rich has been debated from an ideological standpoint many times, but when the great depression hit it wasn't "the rich" who helped put the world back on it's feet. It was Keynesian economics. Economics that the wealthy of the day were so incensed by they actually tried to overthrow the U.S government with the help of a former Marine General named Smedley Butler. Thankfully, Mr. Butler was tired of fighting wars for his corporate paymasters (look him up, he wrote a book called "War is a Racket" and fought plenty of dirty wars in central and south America so that United Fruit could do business in peace) and he warned the government what these people were trying to do. Prescott Bush, GW's grandpappy was one of the conspirators, FYI. So anywho, FDR (a democrat) ushered in the New Deal and is largely responsible for your present economy, which is called a "mixed" economy.
The whole point of a mixed economy is balance- wherein the good of society and the good of individuals are weighed out, so that everyone settles for a compromise, in which most people can have a good life, rather than a small number are very well off while the rest of society is in the poor house. In order for this balance to be achieved, everyone has to give up something- the system just doesn't work otherwise. This does mean that yes, the wealthiest members of society will be more heavily taxed than the less well off. This is not to punish them or to try and hinder their development, but part of the great compromise. In order for a mixed economy to work, a nation must have a very large middle class. In order to have a middle class, you need to have at least a basic framework capable of turning most people into middle class citizens. This means decent universal education, relatively inexpensive (preferably universal, I will say this to my grave!) healthcare, overall good public (not private) infrastructure. Creating this framework that will allow for a large middle class requires a lot of money, some of which does come from taxes on the working poor, some from the middle class, and the most from taxes on big business and rich people. Most of the money comes from big business and rich people, because THEY HAVE MOST OF THE MONEY!!! There need to be clear laws on the rights and responsibilities of individuals and businesses, and those laws need to be properly enforced, to limit abuse from both ends of the spectrum.
Now, the champion of lower taxes on the rich is a fellow named Milton Friedman (posthumous) and his "Chicago School" doctrine argues for a pure free market. No taxes, or if absolutely necessary a flat tax that is as minimal as possible. Minimal or no social spending- just as much is necessary to prevent civilization from falling apart. And of course no government regulation in the marketplace, as that is seen as interference in some kind of natural economic order...although there is no such thing because the economy isn't "natural" and is entirely man made so I never quite understood that one.
In this supposed pure free market, everything is supposed to be self-regulating. The almighty invisible hand of unhindered commerce is considered a mighty force of nature, like a river, that shapes the surrounding geography that is society. There can be no tarriffs to protect national industries from foreign competition, nor can there be any price controls, wage laws or God forbid labour unions! All that is considered to be mucking around with the "natural order", and of course taxing wealthier individuals more heavily than the lower classes is a major taboo as that is just considered being punished for being so succesful.
Okay, so I've blabbed enough about theory, and I acknowldege that there are many many counter-arguments for both sides. So let's talk about how things have worked out in the real world-
Round One- Fight! September the 11th.
1973 that is. On this day in a South American country called Chile, the popularly elected democratic government was overthrown by a military coup and turned into a laboratory for Milton Friedman to truly have a free market, where the rich would no longer suffer under the oppressive yoke of unfair income taxes. Finally, the gloves had been taken off for the doctor to do his work. Until the coup Chile was a mixed economy, left leaning (but by no means communist by any stretch of the imagination) and the democratically elected president, Salvador Allende enjoyed a comfortable majority. The Keynesian, or "developmental" policies at the time were hugely popular. Although Chile was still a poor country, the quality of life of the average citizen was surprisingly good and getting better. Labor unions were strong, major industries were nationalized, not privately owned and generating a modest return on their operations. The average person could afford all the basics- due to price controls, the government forced industry to make the prices of essential goods such that they cost a reasonable part of the the average monthly income. In short, life was decent and getting better.
This situation was completely unacceptable to the wealthy elite of the nation and especially to Mr. Friedman back in the States. The richest people in the country were quite upset that they were being taxed more than the less well off and that their businesses weren’t making as much of a profit as they could, if the government would only stop meddling! The business owners, with extensive support from the CIA (this is not made up) tried extensively to get Allende and his leftist government unseated through elections and the political process but Allende was too popular with the people. American business was quite unhappy with the Chilean economy too- Ford had operations in country and was suffering the indignity of dealing with a strong labour union in it’s factories that the government actually supported!
Eventually a combination of the local business elite teamed up with the Chilean military and police, Chicago School trained economists, and the CIA to institute a coup d’etat. The military used the excuse of getting involved that they were ridding the nation of communism- which to this day is a farce. This group of people behind the coup comprised a very, very small minority of the populace, and on September 11th, 1973 tanks were rolling down the streets of Santiago blasting away with fighter planes screaming overhead. It looked like a war, but to which there was only one side. The country was literally caught off guard with the very people sworn to defend it acting as aggressors to take over. There were no communist guerillas waiting in the wings to fight back, and the only actual fighting happened at the presidential palace, where a few dozen of Allende’s bodyguards and supporters had the audacity to shoot back at the tanks and soldiers coming their way. The military responded by firing 24 rockets into the palace and shortly thereafter the democratically elected president’s corpse was hauled out on a stretcher.
So, what’s the point of this whole story? Well, shortly after taking over the dictator Augusto Pinochet gladly enacted the changes that Milton argued were necessary. The tax system was thrown out and replaced with a minimal flat tax that hit everyone equally, regardless of income. Social spending was cut to the bone, tarriffs that had served to protect the local economy from foreign investment were removed, and government stepped out of regulating the marketplace. Local unions were smashed too- the military actually sent a battalion of infantry to the largest Ford factory, where union leaders were pointed out by management and taken for some “aggressive questioning”. Unions didn’t last long in that environment, and Ford was thrilled! They even donated a large number of green Ford Falcons as a token of gratitude, which became the defacto vehicle for Chile's secret police.
Finally, the rich people were in control of the country, backed up by a dictator who had no qualms with sending in the troops whenever those ungrateful poor people got uppity! No more meddlesome elected government could tell them what they could and couldn't do with their money! What followed next was an utter catastrophe. To maximize their returns, most big business downsized immediately, creating more unemployment. The country was flooded with cheap imports that put many small local companies out of business (kinda like what companies like Walmart are doing to the States!) Inflation soared. With no government regulation on what the poor rich people could do with their money, speculative financing reigned supreme and a cabal of rich bankers came to be known as "the piranhas" reigned supreme. It was this cabal of bankers that then purchased most of the nations major hard assets with borrowed money that they were then unable to repay, further adding to the countries economic woes. With no price controls, the benevolent rich people hiked prices on all the basic commodities- by the late 70's, a "middle class" family was spending almost 70% of it's income for bread. People were dying of diseases and medical conditions that were easily treatable but prohibitively expensive for the average person- because when the dictatorship came to power just about every public institution was privatized (with the exception of the military of course, whose funding skyrocketed)
Chile is a living example of what happens when the rich are given a complete free hand to do as they wish, with no oversight, no taxation. This is not an attack on the rich, but acknowledgement that people act on self-interest, and you need a watch-dog to control the good of society. This watch dog is called the government. If you don't have this kind of oversight and re-distribution of funds, you will get Enron. You will get criminally negligent speculative financing that will ruin the lives of many of your average citizens all in the name of a dollar. At the end of the day, the key is balance. That's all that taxation of the rich is trying to accomplish- keeping society balanced so that the majority of people can have a good life!