Why is a flat rate tax such a bad idea?

Tiered tax rates are very commonplace in most developed societies. However, I’ve never really understood why and I don’t know why flat rate taxes get laughed at whenever they’re proposed.

I get that those who earn more have more of a capacity to pay tax, but does that mean they should? I’m not so convinced. That idea is thrown around in the name of the fairness, but what could be more fair than everyone paying the same amount of tax for every dollar they earn?

After all, high-earners would still be paying much more because they’re earning much more. To me, a flat rate tax would simplify things and level the playing field. You just pay a set number of cents of every dollar you earn to the taxman: I really don’t understand why this is so lambasted when viewing it from a purely intellectual point of view (rather than getting angry that it might mean that you personally might be paying more tax).

Seems to me that it’s just a political tool to appeal to the masses while still pulling in as much tax revenue as is needed.

By Dave

Dave is the proud father of Ellie and Jack. There's nothing that makes him happier than spending time with his incredible wife and their amazing children. He's a civil/mechanical engineer and he also builds and maintains WordPress websites.

One comment

  1. I could not agree more with you Dave. Here in Canada, as we get closer to a six digit income, our tax rate goes up to almost 50% (I think it’s 46%). That’s demoralizing to know that every $1 I earn, I am going to give another $0.50 in taxes. So what is the incentive to go out and get more work, and become a bigger consumer of goods?

    It punishes those who work really hard. If we all had to pay something reasonable, say 30%, then that would be more fair.

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