Update - October 2018 (code improved)
Yes its possible to use a trick, to achieve this. Normally for discounts on cart we use in WooCommerce coupons. Here coupons are not appropriated. I will use here a negative conditional fee, that becomes a discount.
The calculation: 
— The item count is based on quantity by item and total of items in cart 
— The percent is 0.05 (5%) and  it grows with each additional item (as you asked) 
— We use the discounted subtotal (to avoid adding multiple collapsing discounts made by coupons)
The code:
add_action( 'woocommerce_cart_calculate_fees', 'cart_progressive_discount', 50, 1 );
function cart_progressive_discount( $cart ) {
    if ( is_admin() && ! defined( 'DOING_AJAX' ) )
        return;
    // For 1 item (quantity 1) we EXIT;
    if( $cart->get_cart_contents_count() == 1 )
        return;
    ## ------ Settings below ------- ##
    $percent = 5; // Percent rate: Progressive discount by steps of 5%
    $max_percentage = 50; // 50% (so for 10 items as 5 x 10 = 50)
    $discount_text = __( 'Quantity discount', 'woocommerce' ); // Discount Text
    ## ----- ----- ----- ----- ----- ##
    $cart_items_count = $cart->get_cart_contents_count();
    $cart_lines_total = $cart->get_subtotal() - $cart->get_discount_total();
    // Dynamic percentage calculation
    $percentage = $percent * ($cart_items_count - 1);
    // Progressive discount from 5% to 45% (Between 2 and 10 items)
    if( $percentage < $max_percentage ) {
        $discount_text .=  ' (' . $percentage . '%)';
        $discount = $cart_lines_total * $percentage / 100;
        $cart->add_fee( $discount_text, -$discount );
    }
    // Fixed discount at 50% (11 items and more)
    else {
        $discount_text .=  ' (' . $max_percentage . '%)';
        $discount = $cart_lines_total * $max_percentage / 100;
        $cart->add_fee( $discount_text, -$discount );
    }
}
Code goes in function.php file of your active child theme. Tested and works.
  When using FEE API for discounts (a negative fee), taxes are always applied.
References: