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What does a new president do when his predecessor from the other party has left a record of unprecedented prosperity? If you're George W. Bush, you argue that the American economy is in deep trouble and that the only cure is a 10-year, $2 trillion tax cut.

That argument's economic problems are explained elsewhere in this issue. But it's worth recalling that during his presidential campaign, Bush used a different justification for his tax-cut plan: fairness. When government takes in more revenues than it needs, he insisted, it's only fair to return the excess to taxpayers.

In one respect, President Bush is right. The tax system's fairness does matter. Paying taxes is most Americans' chief point of contact with the government. And for many of us, it's the closest approximation we have to a common civic experience. Moreover, since tax collections in the United States depend vitally on voluntary compliance, cynicism may rise and revenues may fall if people feel the tax system is tilted against them.

But the president couldn't be more wrong about his proposal's fairness. By providing far greater tax benefits to the wealthy than to the middle class and the poor, it would make the tax system less progressive across the income scale. What's fair about that?

At bottom, Bush's claim that fairness demands his tax cuts draws on the conservative view (articulated most clearly by Ronald Reagan) that a person's income should generally be beyond the government's reach because it flows from an individual's own efforts. (Of course, this tenet doesn't prevent conservatives from simultaneously arguing that inheritances should also be tax-free.) If individual effort were the only factor that determined income, this argument would be sound. But there's more to income than effort.

To make their case on tax fairness, conservatives misrepresent the character of both markets and democracy. A democratic society probably cannot maintain itself without individual property rights. But individuals make economic choices and produce property within associations and corporations that are the products of law and of communities' political decisions. While hardly anyone enjoys paying taxes, most citizens in democracies choose to contribute some of their private resources to provide public goods and services. Moreover, paying taxes in a democracy embodies a civic relationship of mutual responsibility. People's obligation to pay them is as legitimate as any other public duty.

The conservative view on tax fairness also assumes away the countless economic and social differences that arise in a market-based society and that affect individuals' ability to contribute to the common enterprise. Tax fairness for conservatives often comes down to treating everyone as an equal tax unit, which is why many on the right favor a flat tax (in which everyone pays the same percentage), or even a head tax (in which everyone pays the same amount). In a country where government costs are significant and people have a vast range of resources, a flat tax or head tax that leaves some people without the means to support themselves cannot be fair.

President Bush's tax plan, of course, does not go nearly so far, and it would even reduce the tax burden on some moderate-income people. Nonetheless, its essential reliance on flawed conservative tax principles is clear. Ignoring the circumstances of the rich and the poor and the far greater capacity of the wealthy to shoulder current tax burdens, he would provide much greater tax benefits to the wealthy than to the poor or the middle class. And ignoring the heavy burden of payroll taxes on low-income families, he limits his tax cuts to income-tax payers.

The Progressive Approach

In contrast, the progressive approach to taxation recognizes the real-world consequences that flow from people's varying circumstances. It holds that people should pay taxes according to their individual ability to do so. The result is a tax system that exempts the poor and applies to everyone else tax rates and relative tax burdens that increase with income and vary with family makeup and age.

The progressive case also appreciates that in a market-based society, people's incomes reflect not only their efforts but also other conditions and circumstances that they do not control. It recognizes that although the market's distribution of incomes may be economically efficient in a narrow sense, it cannot be the final word on economic justice. If differences in people's incomes reflected only how hard they worked, then perhaps it would be unjust to tax wealthy people more heavily than others. But income differences reflect much more than effort, if only because people don't start in the same place. People are born with different talents and come to age in families, neighborhoods, and cultures with different resources. And plain luck often plays a role.

America's wide-open markets intensify these factors' effects, so that those gifted with more talent, education, and self-discipline than others can prosper greatly. This is especially true compared to many other advanced countries whose markets and laws are not as hospitable to the prosperous as ours. The economic benefits of wide-open markets are large, but one of the social costs is often harsh inequalities. The wealthy have a responsibility, then, to bear not merely an equal share of the burden but a greater share, because they enjoy a larger share of the benefits provided by our laws and markets. And when accidents of birth or luck impair people's ability to succeed, a progressive tax system can provide them with some means and opportunity to participate more fully in the economy.

Progressive taxation has a strong claim to protecting individuality as well as justice because it also can curb concentrations of economic power and provide poor families with resources they need to live independently. Economic justice is linked to equality of opportunity, a social achievement that progressive taxation advances by changing the market's distribution of income. Changing this distribution is a basic measure of progressive tax fairness: After paying taxes, those at the top are left with a smaller share of the nation's total income than they had before, and those at the bottom with a larger share.

A progressive tax system like ours can ameliorate the worst poverty. But it cannot create economic equality. Lifting tens of millions of poor people into the middle class by direct income transfers, financed by taxes, would require much higher tax burdens on almost everyone. Meanwhile, at the top of the income distribution, the income tax applies only to people's incomes and not to their accumulated wealth, and so can only modestly affect concentrations of wealth and economic power.

Six Elements That Advance Fairness

Despite its limitations, the current federal tax system contains six progressive elements that advance fairness. For poor Americans, (1) an exemption for initial income protects them from the income tax, and (2) the Earned Income Tax Credit, in effect, refunds part of the payroll tax and other tax payments of working-poor families. For everyone else, (3) the tax rates on personal income rise from 15 percent to nearly 40 percent as a person's income increases. And for the richest Americans, (4) most of the value of their personal deductions is phased out at high-income levels; (5) the federal corporate tax affects mainly owners of capital, who are predominantly affluent; and (6) estate taxes affect only inheritances above $675,000, a threshold that will gradually rise to $1 million after 2005.

The current tax system also has significant regressive elements. For instance, the payroll-tax burden declines as income rises, while the tax benefits from most deductions and exemptions increase with income. In addition, the system provides higher-income people with large tax benefits for saving and investing, which the middle-class and poor often cannot afford.

The result is a tax system that is progressive at the top and bottom but not the middle. After paying all their taxes, poor Americans end up with a larger share of national income than they began with, and wealthy people end up with a smaller share. For most middle-class Americans, however, the tax system is more flat than progressive: They end up with roughly the same share of national income post-tax as they had pre-tax.

What's the bottom line on President Bush's tax plan? Simply put, it is unfair. It would make the system less progressive across the income scale. President Bush would significantly weaken two of the current system's six progressive elements -- by cutting the top tax rate more than other rates and by ending the estate tax. The plan also would intensify a regressive feature in the current system, under which Americans' tax rates and tax bills rise more steeply as they progress from poverty to the middle class than they do as they advance from middle class to affluence. President Bush also would provide no tax benefits at all to the poorest working Americans, who pay high payroll taxes but no income tax, and scant benefits to middle-income people who pay more payroll taxes than income taxes. To be sure, these generally regressive effects on moderate and middle-income people are softened for those who also have children, but not for anyone else.

By disproportionately benefiting wealthy people and leaving out the poorest workers, the president's proposal would unavoidably increase economic inequality. And that is contrary to the basic tenets of fairness.

Robert J. Shapiro, an undersecretary of commerce in the Clinton administration, is a senior fellow of the Progressive Policy Institute. He is also managing director of Sonecon, a consulting and investment banking firm, and economic counselor to the Conference Board.