ABSTRACT
The community we envisage is one which is progressing continuously and smoothly in wealth and in industrial technique and whose population is continuously increasing. The problem at issue is that of determining the difference between the states of this progressive community at any given moment in time if its system of income tax had remained unchanged. In the case of a stationary community, we found, the imposition of an income tax brought about a reduction in the annual rate of saving and investment; and in a progressive community the effect of the income tax will ordinarily be the same as this. For the progressive community, as for the stationary community, the effect on the output of effort of the individual brought about by taxing his income may be either to increase or to diminish his output of personal effort.
