Flat rate taxation

[CanadianUKimmigrant]

My husband and I were talking about this today - why does there seem to be no interest in taxing people and corporations a flat 10% (or whatever) tax? I've used the 10% figure as I've read that if EVERYONE paid 10% we'd actually have more tax revenue than we do now. Presumably, it's corporations who would object as the loopholes they currently use allow them to pay less than this but morally, 10% is extremely reasonable. We'd have a far higher quality of life (by keeping more of our earnings) and I know I'd feel far less resentment if I knew everyone was paying their share.
I'm obviously no economist so what am I missing?

Yup, you’re definitely no economist!

There is a huge lobby of vested interests in favour of complicated tax codes - billions of pounds of fees paid to accountants, from the neighbourhood book-keeper up to giants like PwC. These vested interests have friends in parliament who would put a stop to this.

😂

Flat tax is the most regressive of all taxes

OP, as a high earner I’m deffo up for paying your 10% only on my income. Brilliant idea.

So you are advocating getting rid of the personal allowance and putting more of a tax burden on those with a lower income, already on the poverty line? Hmmmm.

FYI the lower rate of corporation tax is 19%.

I'm a highish earner and director of a company. I earn the money, I pay the tax to benefit society.

We'd have a far higher quality of life (by keeping more of our earnings)

But not everyone can keep more of their earnings though... you must realise that?

If you are interested, these are the countries which apparently (according to Chat GPT) operate flat / flat ish tax rates (although flat tax countries still have tax free allowances, e.g., no tax on income below a threshold).

Examples of Flat Tax Systems (as of recent years)

Europe

• Estonia – One of the first (introduced 1994). Current rate: 20%.
• Lithuania – Flat 15% rate until 2019 (now progressive).
• Latvia – Flat until 2018 (now progressive).
• Russia – 13% flat rate introduced in 2001 (recently modified for high earners).
• Bulgaria – Flat 10% income tax.
• Romania – Flat 10% income tax.
• Czech Republic – Flat 15% income tax (with a higher rate for very high earners).
• Hungary – Flat 15% personal income tax.

Other Regions

• Hong Kong – Effectively flat, taxpayers choose between a progressive scale or a flat “standard rate” (~15%).
• UAE, Qatar, Bahrain – No personal income tax at all (effectively zero flat rate).
• Jersey, Guernsey, Isle of Man – Flat(ish) income tax systems (~20%).

I ran the numbers on something similar and just made a thread. The idea was to balance welfare and income tax to a fairer system which encourages personal responsibility and always rewards work equally to all people.

Replacing benefits and the tax free bands with a universal income. £500 per adult per week.

All income taxes are replaced with one flat rate.

To balance the books we needed a universal tax rate of 61%
To pay off the deficit in 11 years we needed a tax rate of 70%

I am going to play around with the company taxes later this week but I need to do some research first.

I do think there is a massive disincentive with the £100k cliff. (Caveat: I know it is a privileged position to be earning near that amount etc etc). Addressing this would potentially bring in more tax and people would strive to earn more. Right now, you have to jump from £99k to about £125k to feel a positive impact on your pocket.

A flat rate is a terrible, regressive tax. It taxes the poor far more harshly than those who can afford it.