IN THE recent unpleasantness about the budget some politicans, mainly Democrats, raised the "fairness" issue by proposing to raise taxes on the upper-income groups, commonly called "the rich." Other politicians, mainly Republicans, cried "Foul!" at this effort and accused the Democrats of fomenting class warfare. For the time being this argument has ended in a compromise, lightly sprinkling but not soaking the rich. The issue will not go away, however. Some Democratic leaders have already promised to return next year with a plan for a surcharge on millionaires.

Opponents of more progressive taxation now must face the need to come up with better answers to the demand for more taxation of the rich. Up to now they have sought to dress themselves in the attractive garb of opposing all taxes. But as the budget situation has made opposition to all taxes untenable, their nakedness has become apparent. Having no principle of taxation except being against it, they have no way to explain their preference for one kind of taxation over another. As they seek to find a way, they will be unable to by-pass the fairness issue.

"Fairness" in taxation is simple the quality of being perceived as fair. It is an aesthetic quality. My University of Chicago professor, Henry Simons, summed up the case for progressive taxation by saying that he found extremes in the distribution of income "unlovely." The feeling that fairness requires taxing richer people a larger proportion of their income than less rich people is a perfectly legitimate feeling. That feeling is a sufficient justification for progressive taxation -- for those people who have the feeling. But there is no requirement for anyone to have the feeling, and as far as I can see there is no objective argument with which to convert someone who doesn't have it. If a person says that he believes that a progressive tax system is unfair he may be many things but he cannot be proved to be wrong. He could say, of the tax system:

If it look not so to me,

I care not how "fair" it be.

There have been people who thought that a fair tax system would tax every citizen the same number of dollars. There are undoubtedly some people, not all of them rich, who think that taxing everyone the same proportion of his income would be fair. These are probably unusual positions today. But polls show a good deal of sympathy for the idea that it is fair for people to keep the income they earn, even if they earn a lot.

The fan in the cheap seats (are there cheap seats any more?) thinks that Jose Canseco is entitled to his salary if he knocks in plenty of runs. The notion of moral entitlement to what you earn is qualified by the fact that what you earn is heavily influenced by social conditions. And I suppose most people who have heard of both would be repelled by the notion that junk-bond king Michael Milken deserved what he earned and Mozart deserved what he earned. But still, there is considerable appeal to the argument that people have a legitimate, though not unlimited, claim to keep what they earn.

In our political discussions, however, the people who oppose more progressivity do not say that they do so because more progressive taxation would be unfair. That is, they do not say that the society would be less fair if income were distributed more equally. That would be a candid, logically unassailable, but politically risky position. Instead, the argument made against greater progressivity is not that it would be unfair to the rich but that it would be bad for the not-rich.

This has beem argued in different ways. In the recent budget melee, a new dimension was added to the argument, for example by White House Chief of Staff John Sununu. It is that we all -- rich, middle and poor -- are in the same boat, as taxpayers; and if "we" allow taxes to be raised on the rich "they" will come after the not-rich next. But that is a weird notion. The not-rich taxpayers know that they are not in the same boat as the truly rich and that the political forces driving for higher taxes on the rich are not driving for higher taxes on the not-rich.

Another approach has sought to change the focus of the fairness argument. Instead of arguing about fairness among taxpayers, it questions the fairness of the relationship between the taxpayers who provide the money and the government that spends the money. That is only persuasive until it is recognized that almost all government expenditures, from defense to day care, have beneficiaries who are also persons. Most of these persons live outside the Beltway, in the same places where taxpayers live. Once that is acknowledged, all the issues of fairness among persons reappear. This becomes obvious, of course, when cuts in Medicare or farm subsidies are proposed.

Finally there is the economic argument against taxing the rich for the sake of the not-rich. According to this analysis, if the rich are taxed less they will work and save more, which will increase the productivity and incomes of the not-rich. I suppose there is something in this, but the question is how much, and after how long. Ido the following little experiment: Suppose there is a society in which the richest 10 percent of the population gets 25 percent of the after-tax income, and the not-rich 90 percent gets 75 percent. The total investment in productive capital, education and research keeps the economy growing at 2.5 percent per annum.

Now the tax system is changed so that the top 10 percent get 26 percent of the income and the rest get 74 percent of the income. This raises the work and saving incentives of the rich but lowers the incentives of the not-rich. Suppose that the net effect of shifting one percent of the national income from the not-rich to the rich is to raise the growth rate by 2 percent. That would increase growth only from 2.5 percent to 2.55 percent. How many years will it be before the not-rich are made better off by the higher growth rate?

By my calculation it will be 32 years before the annual income of the not-rich is as high as it would have been without the tax change, another 14 years before their losses of the first 32 years are made up by their subsequent gains, and another 12 years before the present value of their later gains (discounted at 3 percent) equals the present value of their losses.

I make no case for these particular numbers, and I do not want to suggest that 58 years is too long to wait. I only want to illustrate the kind of calculation that would be necessary to show that tax reduction for the rich is good for the not-rich. But although the general argument is common enough, there has been no serious effort to spell out how large the benefits to the not-rich will be and when they will come. Proposing to shift tax burdens from the rich to the not-rich is asking the not-rich to make an investment in the productive effort of the rich. But the not-rich are never told what the rate of return on the investment is.

There is a case to be made against progressive taxation, and beyond some degree of progressivity it seems to me a very good case. But the opponents of more progressive taxation have never made the fairness argument candidly or the economic argument realistically.

Herbert Stein, former chairman of the Council of Economic Advisers under Presidents Nixon and Ford, is a senior fellow at the American Enterprise Institute.