The human species has an instinctive dislike of taxes.
And why not?
What’s to like about handing over our hard-earned money to a bunch of politicians and bureaucrats?
However, there is a tax idea floating around out there that Canadians might actually tolerate.
It’s called the flat tax.
Essentially, the concept behind this idea is that instead of having different tax rates for different incomes everybody (individuals and businesses) would pay the same marginal rate.
In other words, everybody would pay the same proportion of their income (say 15% ) in taxes. There would be no tax credits, no special deductions, no complicated forms.
And everybody would also claim the same basic personal tax exemption, which would mean, if the exemption is made generous enough, many poorer families might pay little or no taxes at all.
Why is this a good idea?
Well first and most obviously, a flat tax would greatly simplify the mystifying process of paying taxes.
And it is mystifying.
Right now, after all, paying taxes means winding our way through a maze of complex codes and regulations, seeking deductions for this and credits for that.
Then there’s all the time and effort we spend hunting down those crinkled, torn receipts hidden away in forgotten shoe boxes and let’s not forget the emotional trauma associated with the fear of tax audits.
It’s no wonder so many of us pay good money to hire experts like accountants or tax lawyers.
A flat tax would make everything a whole lot simpler.
With a flat tax in place, figuring out your tax bill would be a simple three step process.
Step one: Figure out what percentage of your income you need pay.
Step two: Write out a cheque to the government.
Step three: Drop your cheque in a mailbox.
Now that's easy.
Imagine the joy of filing your income tax return in less than 15 minutes. Imagine not having to hire an accountant to figure out your taxes for you.
Sounds pretty good, doesn’t it?
And besides being simpler, a flat tax would also promote a more efficient Canadian economy.
How?
Well first you need to understand that currently our tax structure is based on the idea that the more money you make, the steeper your income tax bill.
Left-wingers and other pro-big government advocates call this sort of tax policy, “progressive”, but in reality such taxes actually # progress.
Just think about it.
A higher tax rate for higher incomes and profits essentially means the government is financially punishing success.
Simply put, the government is making it harder for people to save money or to invest or to engage in wealth-producing entrepreneurial activities.
In fact, the Fraser Institute, an economic think tank, says business and personal income taxes “are the most inefficient taxes because they penalize productive economic activities.”
A flat tax, on the other hand, is more like a consumption tax. You pay based on what you take out of the economy. What you put back in the economy—in the form of investment and savings—would go untaxed.
This would encourage more investment and more savings.
And besides the economic arguments, isn’t it simply fairer to impose a single-rate tax system that applies to all levels of personal income?
Nor is a flat tax a radical untried idea. Indeed, many countries in Europe and elsewhere are now employing a flat tax and it seems to be working quite well.
Why not try it in Canada?
What do we have to lose, except a tax system which nobody likes?
