Thinking For The Individual

Formerly known as 'Thinking For The People', this site offers some reflections on the state of British society and her people from the perspective of a libertarian Conservative with a passionate belief in the pillars of freedom and responsibility.

Friday, March 25, 2005

The Flat Tax Revolution

There is an interesting idea making its way through the once dark and hellish pit that is Eastern Europe. It is an idea which goes all the way back to the 1940s, when it was embraced by the people of Jersey and Hong Kong - two nations on opposite sides of the globe, but which have seen great success thanks to this idea. It is an idea which is bringing prosperity to the likes of modern Russia and Singapore. This idea is something very simple, yet so very radical for a nation like Britain: the flat tax.

The flat tax is a low, single-rate of income tax levied on all earners above a certain threshold. Theoretically, the flat tax inevitably brings more revenues than our present complicated income tax system. This is based on two ideas. A more dynamic economy is the supposed result of a flat tax because, as is nowadays an accepted truth, lower taxes bring greater prosperity to a nation in general terms. Thanks to this greater prosperity, fewer people would be placed into the low-earners category and therefore fewer people would be exempt from the tax. In addition to this is the fact that high-earners today tend towards tax evasion. If tax regulations are the size of a postcard, and if the rate at which their income is taxed is kept low, there is no capacity or incentive for these people to spend exorbitant amounts in time and money in finding loopholes in the tax law for their benefit. There is strong evidence in recent economic history which agrees with this. In the eighties, US President Reagan reduced the top rate of income tax drastically from 70 percent in 1980 to 28 percent by 1988. This caused enormous economic growth and total tax revenue expanded by 99.4 percent during that decade.

The flat tax makes an intricate tax code simple to understand. It considerably reduces the time and cost of completing tax forms, making the whole system more efficient. The flat tax gives individuals greater control over their own money and reduces the role of an intrusive government.

There are far more benefits to the flat tax than the economic efficiency, the simplicity and the fairness of what I have outlined above. But these are perhaps the most important.

The flat tax provides a brilliant opportunity for Britain to become one of the most enterprising and dynamic economies in the western world. As 'old' Europe and the US stagnate with our high taxes and complex laws, and as 'new' Europe and parts of the Far East boom with their low taxes and simple code, it becomes clear just how much the flat tax could bring to our small island.

1 Comments:

At 12:22 am, Blogger Cancel this account!!! said...

I'm interested in the idea of a flat tax, but I think such a system would have to benefit the poor, too. Scrap or lower regressive taxes like VAT (apart from when there is a direct link between the product being bought and public spending, petrol and road maintainence, tobacco and the NHS, booze and the NHS and police etc) and the TV license (alternatively, if we want to keep public TV, include the TV license in the income tax)

I posted something on the AOL Poltics Board about it, trying to start a new thread, but it petered out!!

 

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