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
Because companies would split themselves into as many legally distinct entities as they need to split their profits between them and have them all below the limit to be taxed.
Unlike companies, households paying income tax can’t split themselves. At best/worst there is the question of applying the income tax to the individual or entire household but that’s it.
If you have a flat tax it doesn’t matter in how many bits you’re split, they’re all paying the same rate.
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