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
An additional point is that – by and large- corporations get to offset all their costs and only pay tax on pure profits. People don’t get to do that. One argument for graduated tax rates is that if you’re earning $12k, you probably need all that just to survive. Whereas, as you earn more, you’re paying a lower proportion of your income on necessities.
The same doesn’t apply to corporations. A corporation with only a few hundred thousand dollars of revenue could be netting almost all of that as profit, or they could be making a huge loss. They might even be making more profit than a corporation with millions of dollars of revenue. So, taxing them both the same, but only on their *profit* makes most sense.
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