![]() Therefore, a flat tax hits those with a lower income harder, and fails to appreciate that money has a different value at different levels of income. Essentially, this means that as a person increases their income, each individual Pound will become subjectively devalued and marginal utility will decrease. ![]() In contrast, an individual earning £100,000 a year will pay £10,000 in income tax and still have £90,000 to live on. Thus, if we imposed a flat tax of 10% for example, then an individual earning £20,000 a year will pay £2000 in income tax, and have £18,000 to live on. A flat tax is incapable of doing this because the value of money is relative to each individual. ![]() Notable economic commentators have argued that a ‘fair’ taxation system is one which makes the paying of taxes ‘equally’ painful for everyone. Let us begin by discussing one of the strongest arguments against a flat tax.
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