Friday, July 18, 2008

Single Rate Tax

I have supported a single rate income tax for years. It would help prevent bracket creep and make tax easier to understand especially if you used the opportunity to remove lot of deductions which usually go to top earners anyway.

One of the main objections is it would be regressive. This is nonsense as the tax fee threshold could be used to make it as progressive as you want. Some proposals even have a variable tax free threshold, as income increased the threshold would be reduced until at some level, you would pay tax on all your income.

Others object we could not afford it. Again this is wrong, Treasury seriously examined a single rate tax a few years ago and concluded we certainly could.

However, before we go any further, can we please not call it a flat tax? Its really misleading people think a flat amount tax is being proposed. Besides, it will get connected with flat Earth, flat chested, flat beer etc. Single Rate Tax sounds a lot better.

More information:

John Stone: Unjust, unimaginative gall of withholding cuts
May 02, 2005

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Ralph Buttigieg
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