Flat taxes hit the middle classes
That flat taxes aren't as good as their advocates claim is easily understood from the fact that almost all plans for such taxes are combined with huge, revenue-destroying tax cuts, ranging from £50bn to even £100bn, to make them palatable.The Economist, who only a few months ago wrote a laudatory article about flat taxes that was similarly dishonest (what they argued was the main theoretical benefit did not exist in the practical case they made), has to its credit asked a tax accountant to run the figures for a revenue-neutral flat tax.
Basically you could have a £10k allowance and a rate of 30%. What this means is those who earn less than about 18k a year pay less tax, those who earn more than 50k a year less tax, and those who earn 18k to 50k pay more, those 35-40k a lot more.
So basically it's a non-starter for the Conservative party. Tax reform, in which our most loyal supporters pay more*. Good one, David.
* There are loads of other issues. This merely replaces income tax, it says nothing about tax-credits, means-tested benefits, and national insurance. Those would remain in place, so marginal rates (I would dispute they are anywhere near as important as the Right claim, but let's fight at their end of the bar) would be unchanged, or even higher. Finally, as Oliver Kamm said, it is not having more than one rate which makes tax complex. Even Prince Charles, if he paid income tax properly, could do it.
posted by Matthew @ 9/10/2005 10:40:00 AM
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