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
The difference is that corporations are taxed on **profit** while individuals are taxed on all income.
If you make £50,000 a year, most of it will go towards rent, food, utilities and all other basic survival needs. If you make £500,000 there will be a lot more left over after your needs are met. So it makes sense to tax that extra money at a higher rate.
If a corporation has £1M in revenue and spends £800K to earn it, they have £200K in pure profit. It doesn’t hurt them to tax it at a flat rate because it is anyways “extra” money.
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