jimbob wrote:Over 100k a year voluntary upper tax bracket.
I am not a psychologist however if you ask someone to do something rather than tell them to do it they are likely to be happier to do so I would think.
Bear in mind the Government introduced a top rate of 50% tax for a year. It was found that they took a fair sum less tax in the year there was a 50% rate than when the tax rate was 45%
Making those who earn more out to be villains who should pay more tax will simply make them feel angry and they will try find ever more creative ways to avoid paying any tax out of resentment.
If you were to create a voluntary upper tax bracket where people could pay extra tax in return for some form of benefit you could maybe incentivise people to pay more out of goodwill.
So maybe have a yearly tax donor league published where the highest 3 or 4 voluntary tax donors get a public award of some sort so you turn it almost into a pissing contest for the wealthy "Look at me I am so wealthy I could afford to voluntarily give away ££££ to the public" ?
Or possibly have a year end lottery for those who paid excess taxes where they get the opportunity to win some sort of actual prize ?
As to whether flat tax could even work? Yet again no idea however if you consider how much tax is avoided due to all the loopholes and rebates in tax law if you were to close all of them those due to pay tax would have to pay whats due. When you consider the majority of tax avoiders are going to be those who are making huge amounts of money and can afford to put a lot of time and effort into reducing their tax liabilities to a minimum the amount they are removing from the system by playing the rules and loopholes is substantial.
As an example of how I would HOPE it would work and not an accountant so not accurate numbers just made up percentage to make calculations easier etc ok...
In the present system someone earns 1 million. 1st 20k tax free. So liability is £980 000
Earnings between £20k and £40k taxed at 25%. £980000 Less £5000 leaving taxable final sum of £975000
everything over £50k Taxed at 50%. £975000 - 50% = £487 500 to be paid in tax.
Odds are they will use very creative accountants and all the loopholes to reduce their liability to at least 50% or more of the overall tax liability so will in fact pay about £245000 in tax or less.
If you close all the loopholes first 20k tax free.
Sum Liable to 25% tax = £980 000
£245 000 in tax to be paid. No less possible due to no way to reduce it.
As such theoretically it will reduce the cost and complexity to the system and tax revenue should either stay at the same rate or quite possibly increase.