The Flat Tax: how could it change our tax system?

by Alessandro Malerba

The so-called flat tax aims to eliminate the current four Irpef rates and the related income brackets, introducing a single rate for all taxpayers, but the proposal of the three parties of the centre-right coalition are different in terms and timing.

League

It is the proposal defined as the "most extreme", introducing a single rate equal to 15%

1. A first extension of the flat rate regime for self-employed workers
2. Secondly, the application of the flat tax on the income of businesses and families
3. Finally, (over the five years) the extension to all incomes for work and business

   In order to protect the so-called principle of proportionalityart. 53 of the Constitutiontwo brackets

   In the flat tax system proposed by the League, the progressivity of the tax on the incomes concerned is implemented with the system of deductionsno tax area

   Forza Italia

   According to Silvio Berlusconi's party, however, the flat tax should be set at 20%,deductions and deductions for families and low incomes

   Brothers of Italy

   The emphasis given to the flat tax by Giorgia Meloni's party is much less than that of its coalition partners, making it a minor proposal in the electoral programme. The approach is well framed by the prof. Maurizio Leo (head of the economics and finance department) who in a article published in La Repubblicaon everything that is declared in excess (work and business income) compared to the previous one, you will pay less taxes and, in particular, only 15%. The 15% taxation concerns only the year in which the increase in income is achieved, while it would not make sense to carry the benefit into subsequent years, if not in relation to any further increasesnational productivity bonusa stimulus, temporary although decisive, to get up from the sofa, to get busy, toimprove for oneself, for one's family and for the country

   The proposals of Lega, FI and FdI, as seen, are different from each other, but are based on a ccommon concept: by lowering the tax burden on income (business, self-employment and employee) under equal conditions, less tax evasiontax expenditure

   Flat tax: advantages and criticisms

   Understanding what the flat tax is is much easier than analyzing what the advantages and disadvantages of the introduction of taxation at a fixed rate of 15% or 20% could be.

   According to the proponents of the proposal, even considering the differences between the flat tax formulas described, the main advantages would be three:

   • reduce the tax burden
   • counter tax evasion
   • simplify the system by rationalizing the current deductions

     The major criticism made by the centre-left groups (Democratic Party first and foremost) is that the flat tax in Italy would mostly bring disadvantages: the cons of introducing a flat tax would belesser revenue for the State,advantaging the richest

     The flat tax in Italy: a measure already implemented

     What is often not underlined is that the flat tax already exists in our system

     The current flat tax is operational only for taxpayers with a VAT number inflat-rate regime

     A profitability coefficient

     • 5% for new activities;
     • 15% for already operational activities.

     The flat tax is not only the protagonist of the electoral campaign, but was one of the central proposals of the discussion on tax reform, with some news regarding VAT numbers.

     Thedelegation lawstandbyintroduction of a new facilitated tax regime

     The flat tax for lump sums up to 65,000 euros is accompanied by a new replacement regime for those who exceed the limits, aimed at gradually accompanying the company or professional towards the ordinary IRPEF. According to the contents of the enabling law, the flat tax “extra”flat tax project incremental up to 100,000 euros

     Flat tax: nothing really new

     It is correct to say, therefore, that the proposal for the new flat tax would not overturn the current tax system, considering that the single rate is already widely used

     Therefore, today, rather than the rate itself, the difference in terms of real taxation is made by the deductionsconcessions

     Recalling a recent article by Marco Miccinesi, published on IlSole24Orea single-income family pays approximately double that of a two-income family“ the taxation of the single-income family would come closer  very much to that of the two-income family, finally eliminating the current discrimination between families. single-income and two-income ones;discrimination that appears  completely unjustifiedin light of the unity of the family unit whose incomes are used on the basis of the choices made together by the spouses and for the satisfaction of the exact same needs, both in single-income and two-income families

     The challenges of the Government after the September 25 elections

     What is certain is that the ball will now pass to the new Government that will be formed following the political elections on 25 September 2022, which will have the task of restarting the discussion on the reform of the tax system. The advantages and disadvantages of the flat tax, and its possible extension not only to businesses but above all to families, will therefore also be discussed in the coming months.