Even ignoring the disposal income question, it's regressive in utilitarian terms because money, like most commodities, has declining marginal utility, so taking 20% of $1,000,000 takes a lower percentage of the utility of that $1,000,000 than taking 20% of $100,000 does of the $100,000.

(A lot of analysis gets based on the misuse of $ as a flat measure of utility, which is deeply flawed.)

EDIT: more accurately, this subsumes and generalizes the disposable income issue, rather than ignoring it, since the concept of "necessities" that come out before income is "disposable" is really a simplification of the "low hanging fruit" of high-utility spending to a binary category, rather than a continuum.

> Ideally you would want to exclude the expenses incurred to sustain a reasonable minimum quality of life and only consider taxation on income in excess of that

I don't agree that is ideal. Ideally, everyone makes an equal sacrifice. What is an equal sacrifice?

* Everyone could pay the exact same amount of tax, let's say $15K. But that is not equal sacrifice; some people can afford $15K much more easily than others (especially those who don't have $15K).

* Everyone could pay the same percentage of their income, let's say 17%. That also is not equal sacrifice: If you earn $1 million, you can afford to give up 17% of it much more easily than if you earn $10,000.

* Tiered progressive tax rates: These can be equal, if calibrated effectively. It will never be perfect and always up for debate, but it can be done pretty well.

I think this whole tax debate misses an important point. Taxes are viewed as revenue in terms of budget and there is a business tendency to make more revenue to cover expenses. If you stop seeing Tax as a major source of revenue and start having Govt invest money in different ways to make money other than just taxes, we can start actually having a real debate around what is a fair tax rate for govt to cover their expenses and figure out a way to make it progressive.