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There are some camps of economists that claim that the most fair taxation system would be VAT only - no income tax or anything else, as the income is demonstrated in your consumption. It is an interesting idea, though I'm not sure if I agree.
Emotionally, I tend to say, why not tax heavily the huge incomes, and leave most of the people who are struggling alone? But that, as Geoff said, encourages cheating. It encourages people with money to take their money elsewhere. Hiding it completely, or letting more friendly governments take advantage of them. That's one of the (many) problems Greece is facing right now. People with money just take it and run. Leaving the rest to pay for everything, whether they can or not.
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