Final answer:
Congress was concerned about inequities in taxation where high-income individuals could avoid taxes, shaping tax reforms to be more equitable. Economic inequality, tax fairness, and incentives are balanced in tax policy. Historical contexts like the Three-Fifths Compromise also illustrate the intersection of taxation and representation.
Step-by-step explanation:
Congress indeed became concerned about the inequity that results when taxpayers with substantial economic income can avoid paying any income tax. This concern is based on the principle of tax fairness and the idea that everyone should pay their fair share. This principle underlies many tax reforms aimed at closing tax loopholes and ensuring a more equitable tax system.
The complex nature of the tax code can make it difficult to determine what individuals owe, and the bracket system is designed to have tax rates rise with rising income, although until the late 1970s, inflation-induced nominal wage increases moved people into higher tax brackets without real income gains.
Economic inequality and taxation are inherently linked, as government policies to encourage equality can sometimes dampen incentives for economic output. An extreme emphasis on income equality could lead to a situation where societal incentives for work and entrepreneurship are reduced.
Conversely, prioritizing high economic output can lead to greater income inequality. The Three-Fifths Compromise is an example from history where taxation and representation were intricately linked, informing modern considerations of equity in taxation.
The question of what is fair in the context of taxation is an ongoing debate, with various perspectives on whether the wealthy should pay more, or everyone should pay proportionally to their income. The United States imposes an estate tax, suggesting an effort to limit the transfer of wealth through inheritance, though it affects only those with high levels of wealth.