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Andrew Sainsbury
Richard J Murphy
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Comments by "Andrew Sainsbury" (@andyinsuffolk) on "Why are the Tories talking about flat taxes again?" video.
Maths: If tax-payer A pays 10% tax on his 10k income (1k) and tax-payer B pays 10% on his 100k income (10k) please explain how 1K is greater than 10k. If insufficient revenue has been collected to maintain Tax-payer A's previous state support payments raise the 10% by whatever is required. Flat taxes are plain simple common-sense that will stop politicians playing tax games and will save us vast fortunes in bureaucracy - no more arguing about the threshold levels for the next tax rate for one thing.
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Somebody can interpret this for me - please. Richard seems to be arguing against his own fantasy Flat Tax model - maybe? Why would the introduction of flat tax mean that income tax has to be set at the same rate as consumption tax[ VAT] and any other taxes? The main concept is to simplify banded systems - the concept of a universal rate is interesting and maybe has merit but it's not required for simple flat tax principles. Why would the rate be set to reduce tax revenue, if 20% didn't balance the books then raise it till it does. Flat tax does not mean unchangeable rates - if that's the argument being made[?] In a welfare state like the UK with quick direct payment mechanisms why would a flat tax benefit the rich? Income for a huge part of the population is set by the state; universal/tax credits etc. Even the poorest will have no difficulty understanding that their high tax rate doesn't set their income - unless Richard thinks that flat taxes also mean the end of any welfare/re-distribution [?]
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@terryjames8238 - I was making a general point not about the UK specifically. Even so the logic still works, if the policy is to match the outcomes of an existing system 'raise the 10% by whatever is required' - 'to maintain Tax-payer A's previous state ' - progressive taxation is an entirely unnecessary complication especially in a welfare state. Twelve per cent would more than cover it in this simple example.
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On consumption taxes they should be as broad as possible, rents, finance, food etc - treat all consumption transactions equally. The renter will have no problem paying VAT on his rent, the house-buyer VAT on his new house if that is (partly) balanced by the low rate everywhere else and the refocus of the economy from arbitary subsidy. If 20% is sufficient now it would be presumably much less than 10% to match the revenue. Who would even care about VAT if it got down to 2.5%-5% ? (Politicians/Idealogues as they become redundant)
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With the simple flat rate tax obeying the 'simple, broad & low' principle you don't have tax free allowances, the whole purpose is abolish bands & thresholds. Any assistance is provided from tax collected not before it is collected. Your 90/80 model would result in the immediate collapse of society. No super skilled professional; doctors, engineers etc would keep working in the UK, the vast majority of the population would keep thir income below 80k and tax revenue would collapse as the £80k is way above the level where a huge chunk of revenue is currently raised.
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@adenwellsmith6908 - Land Tax is interesting because the land protected by a nation state is a fixed unchanging asset linked to natural resource usage; minerals, water etc. It's a unique category and land owners should not be subsidised by non land-owners in a democracy. So what about a very low rate which is excused when the land has public use/access or is owned by the state? Even a £1 an acre would raise tens of millions to run the land registry and land related overheads ??
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