flat tax in canada
In a recent study, the Fraser Institute is quoted with saying, "A flat tax is necessary to achieve efficiency, fairness, and the simplest- measure of a successful tax policy (Fraser institute)." The Flat tax system is a comprehensive, integrated approach to taxation. Flat tax uses a uniform tax rate for income, whether personal or business. The flat tax system ensures that all sources of income are taxed once and at one rate. The introduction of a flat tax system would create fairness, drastically simplify and improve Canada's tax system. Flat tax would not destroy progression in our tax system it would only make it more fair. Flat tax is not a new idea, it is currently used in Hong Kong and the Channel Island. The issue is not with out complication. Some would suggest that Flat tax would only benefit the rich. This argument is false, simply because if people have more money to spend, they will, and that is beneficial to every one. The issue is very significant because it is important to know if there are better way for the government to operate our tax system and flat tax is defiantly one of them. The biggest concern with flat tax is that it would eliminate progression in taxation. This is entirely false, a flat
"Significant tax reform required in Canada." Clemens and Emes. Fraser Institute, 2001. Available at: www.fraserinstitute.ca/media/mediarelease/2001 tax system is still progressive in a sense, only it is the most fair way of taxation among everyone. A flat tax rate of 20% with no deductions would earn the government the same amount of money as today's system. However progressivity is still found in a flat tax system. If a person earns 20 000 dollars a year they will pay 4000 dollars tax. If one make 100 000 dollars a year then they pay 20 000 dollars tax. This is progessivity at it's fairness, The more one makes the more they pay. This form of tax is still progressive yet it eliminates the damaging affects of increasing marginal tax rates. The most specific effect of progressive marginal taxation is its discouraging effect on entrepreneurial activities, saving and investing. Progressivity can y be further created with the introduction of personal exemptions. These exemptions allow individuals, families and businesses to earn a certain level of income before being taxed. However one must keep in mind that the larger the exemptions the larger rate that must be used in taxation in order to achieve sufficient revenue. "Average taxes, marginal taxes and progressivity." Fraser Institute, 2001. available at: www.fraserinstitute.ca/publicat...1_issues/2001/flat_tax/section_05
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Approximate Word count = 1016
Approximate Pages = 4 (250 words per page double spaced)
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