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The United Kingdom is not alone in the world in having a cumbersome and expensive to administer income tax system. A feature, beloved of left wing politicians, and it seems that they are the only type who gain office these days, is complication.
A result of that love of complexity can be seen in the British income tax system. An army of good folk are assembled in its administration. In high rise office blocks up and down the length of the country this army assesses everyone’s tax liability, collects the money, repays the overpayments, chases the slow payers, bankrupts the poor, the stupid and the unlucky, and sends their collected money to the Bank of England to add to the other taxes and revenues of government ...
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There are many folk engaged to little good purpose. And now, it gets worse. There is another army of good folk some are individuals like the self-employed, the accountants in corporations, professional advisers such as accountants, financiers, risk assessors and tax consultants who devote their lives to minimizing the income tax levied and paid by themselves, their employers or clients. Everyday these two armies take to the field to produce absolutely nothing.
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Meanwhile, as these armies bleed the productive folk of the country white, others have scrapped their complex systems and gone for a flat rate of income tax.
Instead of all the allowances and benefits and penalties which even accountants and tax collectors alike both struggle to understand, we have simplicity.
No one pays income tax until their income reaches a certain level, say half or two thirds of the average wage. After that everything is taxed at a single standard rate ... end of!
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What would a flat tax mean?
1. Instead of hundreds of thousands of folk being employed in its collection, all of the tax returns for the whole nation could be handled by a dozen semi-retired folk with PCs.
2. All of the poor would be removed from taxation and the so-called poverty trap.
3. The simplification and transparency of the system would encourage thrift, hard work and better business.
4. Because the passage to a changeover to an uncomplicated flat tax would have to be organised with the help of the swollen ranks of the legal and accountancy professions, the move to a flat tax may not happen next week.
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