Hi all
This may be a bit more UK focused, but from what I can see it applies to a good few other countries too.
In the UK, personal income tax is graded based on income, with a tax free threshold, then the basic income tax level between £~12,000 to £50,000, then a higher rate above £50,000, then another band too. This seems fair as the more you earn, the more of that ‘higher’ income gets taxed.
Why isn’t this the same for corporation tax? This is a flat rate regardless of turnover/profit, with small companies having to pay the same proportion of their profits as large multinational companies. Wouldn’t it be fairer to have bands like personal income tax?
In: Economics
Remember that profits from a corporation are paid to shareholdees and are taxed with regular rules. For an individual shareholders that is different rules than say a pension plan.
Whether you tax the company, or the owner of the company receiving the profits doesn’t really matter. It’s the same money.
There are certain incentives and benefits to taxing corporations or their shareholders, or a bit from both. You can encourage different types of structures or favour pension plans over large individual shareholders etc. It’s not that it makes no difference to how the company operates, and governments generally want consistent revenue, or at least some consistent revenue. But it is still just one pool of money being taxed.
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