Doing the maths, it means that if we had a flat rate tax, the 2010 rate would be: 13.5%
Whats encouraging is that we can easily increase our tax take by 25-30% (i.e. to c.18% flat rate tax) without much difficulty.
1) What about the levies, are they in addition to the 13.5%?
2) All you're doing is taxing the higher earners less and the lower earners more
3) The idea that by simply changing the tax system we could generate 25% additional revenue with little or no hardship for anyone should have set alarm bells ringing as to the absurdity of the suggestion given the point from which we are starting.
Simple example.
A married couple on €50k p.a.(€25k each) probably pay about €3k p.a. in income taxes and possibly €3k p.a. in levies.
They possibly pay €18k p.a. on rent/mortgage, leaving them €500 a week to live on.
A 13.5% flat income tax would increase their income tax payments by about €70 a week.
The 'not so difficult' stretch to 18% flat tax would reduce their disposable income (after rent/mortgage) from €500 p.w. to about €385 p.w.
My point is this Csirl. You have been continually touting this flat rate tax idea, but I seriously doubt you have given a seconds thought to the real consequences of why it would cause enormous hardship on many people.
You're suggestion would involve reducing the disposable income of two married couples by up to 25% in order to cut the taxes of a guy on €100k p.a. by €12k per annum. How can this be easy?
13.5% is a nice sound bite compared to the current tax rates, but this is hugely misleading as you are not comparing like with like. When you factor in the elimination of tax free allowances and layer on the levies what your suggestion amounts to is real hardship on people who can least afford it.
To be honest you don't need these examples to arrive at the conclusion that if high earners are significantly benefiting, the less well off must be getting hit hard.
For my part, I'd suggest we eliminate the levies and PRSI and have a combined rate of income tax at a few levels. 0% on the first €10k, 15% on the next €10k, 30% on the next €10k and 50% of earnings above €30k. I do believe lower incomes need to be brought into the tax net to some extent, but we shouldn't cause excess hardship for the lowest paid, which is exactly what a flat rate tax would do.