Well it seems that today, short little link-pieces are okay, so here is a short little link piece, with links to these mealy-mouthed trimmers, arguing for a flat tax, and to me, arguing that mere flatness is not the point. Just having a flat roof to the graph is a hideous compromise. It must be flattened until it is zero-height roadkill. (Metaphor muddle there, but I hope you get the picture.) Seriously, this is one of my best diatribes (“THE TOP RATE OF INCOME TAX SHOULD BE CUT TO ZERO”) from my time as a Libertarian Alliance pulpit banger, and I recommend that you read the whole thing, even if it is only a .pdf.
When the world in due course sees the wisdom of this proposal and enacts in universally, the result will be that there will remain a top rate of income tax, but that whatever money you earn above the level at which the top rate of income tax kicks in, you keep. All of it. These flat-raters say that it should be fifteen percent or whatever for everything you earn. I say, once you have paid your share of the rent, you should keep the lot.
Sorry, I went on a bit there.
True enough. For me, the main advantage of an ASI style flat income tax rate, is that it can be transparently cut. That is: you can see straight out that a tax cut is a tax cut – and not an increase hidden in the small print. The scope for shenanigans is reduced.
Actually, we have a sort-of flat rate system in the UK, since employee’s National Insurance is only levied on (roughly) the salary taxed at the lower tax rate – so the difference in effective rate between the bands is a lot lower than you might think.
Being a peasant, I would support higher taxes for higher earners as they are more able to increase their wage to offset the effects of paying more tax.
‘But mollusc, you cretinous serf, there would be less money in the pot and your own pay would be cut to 3 turnips a week!’ Not really, as us peons would just drop dead on less than 4 turnips, the cuts would have to be made to people above the minimum wage.
Being one of those so-called “higher earners”, I can assure you that I have absolutely naff-all control on what I get paid by my employers. Same as with every other employer. The only significant way of exercising this so-called ability is by my moving jobs – the same as it was when I didn’t get hammered for 40% tax.
Apologies, TPO, I was thinking more of the old ‘supertax’ kind of thing aimed at the top brass. Should have been more clear.
Speaking as someone who pays close attention to economic and business issues, your attempt to “tax the top brass” is doomed to miss most of them. A huge part of the “salary” we hear about is in stock options and outright grants of stock. These kinds of payments are easy to fudge as far as the tax accounting is concerned, and that is a huge part of why they are given out so generously.
Unless and until you force all payments to an employee to be in the form of a check that can be accounted for (no stock options, no stock grants). You’ll never be able to truly make the “top brass” pay more than they are willing to pay.
Prices are governed by relative scarcity of the commodity in question and the amount people value it.
The same goes for incomes. Those who earn most are contributing most towards other peoples’ wants, needs and happiness.
So income tax is the most damaging tax when it comes to human happiness and fulfilment.
The arguments for a flat tax are largely phrased in terms of maximising government revenue. Sure it may be less bad than ‘progressive’ taxation, but not that much less bad.
Has any study ever been carried out as to what the actual rate of a flat tax would be in the UK?
You bunch of unfeeling bastards! How dare you support such wicked measures! What about the poor and the underprivileged who languish in poverty while you fritter away your ill-earned money? Don’t you feel anything for them?
Social justice! Social equality! The poor should be…
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And so it goes on. Me? I’ll just tell ’em that I donate my own money directly. No need for the government as middleman.
Personally, I also believe that some level of taxation is necessary, for defence and paying for privately contracted law and order organizations, if nothing else. Something around 10-15% would be a nice figure, enough to buy nice toys and technology to build better toys.
TWG
The socialist, Norman Thomas, was asked how President Roosevelt was carrying out his policies. He replied “yeah he’s carrying it out on a stretcher.”
Would a flat-tax help “carry out libertarianism on a stretcher in America?
For selfish reasons, I’d welcome it.
But as a matter of principe Brian is spot on. It doesn’t matter a bugger what the notional rates are; it is the total amount of tax that matters. And if anything, a flat tax would probably end up increasing the total tax theft, not reducing it.