Sunday, August 14, 2005

It's Never Easy to Reform Tax

"The Guardian: Going flat out"
LeaderSaturday August 13, 2005

“The notion of a flat tax is based on a simple premise: charge a single tax rate on all personal income. It eliminates complexity and bureaucracy, a welcome reform considering people were complaining about taxes well before Adam Smith called them "an unnecessary trouble, vexation and oppression". Supporters boast that tax returns could be done on the back of a postcard. Both Conservatives and Liberal Democrats have attacked current tax legislation, which has ballooned to over 11,000 pages, and formed commissions to study the idea.”

Faced with a challenge to the assumptions of modern taxation policy, the rest of the editorial reports the response of the Inland Revenue which, not surprisingly is entirely negative. The ‘commissions’ it has set up will create the paperwork to show a Flat Tax won’t work, will cost too much and, even if it did work it still wouldn’t be a good idea.

Tax reform – from simplifying it to adopting a different complex system – is never going to be easy. Flat Tax is simple and whatever else it does it reduces the need for several thousand tax officers, accountant and consultants specialising in tax avoidance schemes and thousands of man-years of journalists’ paid work to comment for and against tax practices, including reforms.

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