In the before times, when corporate and marginal income tax rates were high and stock buybacks were illegal, a business could do two things with its profit:

• Reinvest it into the business, as employee compensation, equipment or facilities, and/or
• Pay taxes.

In the 1980s, we gave them a third option:

• Keep the money …which for some reason was supposed to not encourage the rich to hoard money and/or engage in non-productive financialization.

The rich, of course, hoarded and engaged in financial engineering pretty much immediately, and everyone else, which meant employees, suffered for it.

If you look at wages-vs-productivity curves you can see society “break” in the 1980s, with the rich running away with their wealth and everyone else getting stuck in a quagmire of low wages and starved public services.

So that’s why high progressive taxation helps employee: it forces the rich to either invest or find the nation.