Employers who pay their employees $35,000/yr have to pay more in federal taxes than if they paid their employees $34,000/yr. I don't consider that a penalty either. Its progressive taxation.
The two aren't mutually exclusive. Just because it's called "progressive taxation" doesn't mean it isn't penalizing. I consider any tax at all penalizing. It's the exact reason politicians raise taxes when they want to discourage certain activities or lower them when they want to encourage more of a certain activity.