As can be seen in the last example, marginal tax rates under a convex income tax may be very high even among taxpayers with relatively low incomes. The tax's negative impact on productivity is therefore not limited to the wealthiest producers, but extends to individuals at almost all levels, who are deterred from developing their creative ability and applying their intelligence toward improving human standards of life.

A common misconception is that high marginal rates under a convex tax are merely a "bracket" effect—that is, that they arise only because the tax tables contain a finite series of discrete steps. Yet even if a perfectly continuous tax structure were devised, as illustrated approximately in the graph at right, the marginal tax rate would always exceed the average tax rate at every positive income level. Income i is indicated on the horizontal axis, and the corresponding tax t(i) on that income is represented by the vertical axis. The blue curve illustrates the relationship between the two and illustrates the characteristic convex shape of a so-called "progressive" tax structure. Convex Income-Tax Structure