A flat tax system is one in which the income and gains are multiplied by a single rate of tax and the tax is calculated. It seems simple enough in the reading but is quite complex and complicated in practical application.
The rate of commodities is sliding that is liable to change irregularly so the whole system of credit and debit becomes quite complex and cumbersome. This gave rise to the need for a flat rate tax system but when it was applied it came out to be a lot more complicated and controversial.
Most of the people think that if we follow flat rate tax system, there will be ease in the filing of tax returns. It will reduce the time taken to fill the tax forms and most importantly eliminate the need to consult a professional tax consultant like an accountant or lawyer. Besides, there will be an elimination of all the exemptions and credits as well as the graduated tax rates. These will be replaced by a single tax and rate along with the upfront deduction amount.
Some people think that when we employ it properly, it will increase government revenues. On the other hand, some people think that the burden of the tax will fall upon the low and middle-income earners. Some economists say that the burden may not be so but the productivity will be more. This will lead to better earning and better re-investment in the economy by the earner. The existing tax system may not be supporting the hard work. As one earns more he or she has to pay more. The single tax or flat tax system does not support this and may encourage more productivity and economic growth.
Flat rate tax system will encourage the entrepreneurship of young people leading to more jobs and opportunities, more investments in different sectors and will automatically increase governmental revenue generation. Some economists do not agree to these facts, they say that as the marginal rate will cut down it will be a boon to the rich. The tax burden will shift to the less earning people. There will be a complete change in the delivery of social services. There will also be a change in the credits and exemptions as the eligible persons may change.
As the debate for implementing flat tax system is going on in several countries, some countries are following it for decades and have a stable economy. For better understanding of the subject Taxation Assignment Help from BookMyEssay can work. Taxation system has been complicated in every country due to the complex taxation laws. These laws are different in different countries, though basic concepts are same. Due to the complexity of the system, most people wanted to shift to a flat-rate tax system. It has been advantageous in many ways to many people. This has also led to an increase in tax-payers and in economic growth of the country. For more, you can ask for assignment Help for Taxation Subject.