Benefits of Flat Tax
Flax tax is a scenario where everyone is taxed at the same ratio regardless of working position. Currently, graduated income tax is common in many countries but some politicians favor the implementation of a flax tax.
1. Simplify tax code
Some argue that the implementation of a flat tax would help simplify the existing tax code. In addition, they also believe that the system would be fair to all citizens, in that high income earners turn a bigger percentage to the federal government.
2. Better income distribution
The main benefit of a flat tax is its ability to balance inequalities in regards to income distribution. Many state that by adoption of a flat tax mechanism, high income earners will have to meet high tax obligations to help correct the imbalance.
3. Increases net income
The reduced tax burden on low income businesses in a flax tax structure will increase their growth as it acts as a stimulus for business formation. In addition to that, household and individuals would also receive the same benefits as those experienced by their counterparts. As a result of the reduced tax burden, low income families will have better purchasing power.
4. Higher profits
The increase in household purchasing power will increase profits for businesses across a larger number of sectors. Small business will also enjoy better revenue, which in turn improves macro-economic performance.
5. Boosts economy
The most common argument is that flat rate taxation will help improve the economy, as well as private savings. However, you should not make comparisons between the existing income tax scheme and your version of an ideal tax system.
Although switching to a flat tax system would not produce drastic improvement in the economy, small efficiency advances might be essential since they continue yearly. However, similar benefits may be achieved by the current tax system.
