Reduced inequality Progressive taxation generally reduces economic inequality, even when the tax revenue is not redistributed from higher-income individuals to lower-income individuals. However, in a highly specific condition, progressive taxation increases economic inequality when lower-income individuals consume goods and services produced by higher-income individuals, who in turn consume only from other higher-income individuals (trickle-up effect).
Reduced inequality Progressive taxation generally r,educes economic inequality, even when the tax revenue is not redistributed from higher-income individuals to lower-income individuals. However, in a highly specific condition, progressive taxation incr!eases economic in?e.quality when lower-income individuals consume goods and services produced by higher-income individuals, who in turn consume only from other higher-income individuals (trickle-up effect).