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
I think technical explanation is not what you are expecting here.
My explanation is that in the world of economic policy making, the main objectives are to maintain (1) income equality for people and (2) fair market competition. Hence the progressive tax rate for person and fixed tax rate for company.
And if the government somehow wants to apply (1) for companies, they have many other preferable measures than tax rate.
Latest Answers