Supporters of the progressive system claim that higher salaries enable affluent people to pay higher taxes and that this is the fairest system because it lessens the tax burden of the poor.
Currently, 68% of Republicans with incomes of at least $75,000 say the tax system is very or moderately fair, up from just 37% in 2017. By contrast, the share of Democrats who view the tax system as fair has declined 19 percentage points since then (from 40% to 21%).
Income Tax
| Amount of Net Taxable Income | Rate | |
|---|---|---|
| - | P250,000 | 0% |
| P250,000 | P400,000 | 20% of the excess over P250,000 |
| P400,000 | P800,000 | P30,000 + 25% of the excess over P400,000 |
| P800,000 | P2,000,000 | P130,000 + 30% of the excess over P800,000 |
In terms of personal income taxes, the Philippines' tax efficiency rate is at 6.2 percent, only higher than Indonesia's 0.1 percent. ... The Philippines also did not fare any better when it comes to collecting corporate income taxes as it has a tax efficiency of only 11.6 percent, despite a high 30 percent tax rate.
VAT is regressive in nature. Thus it will affect the poor people more than the rich because they spend more proportion of their income. All purchase and sales records should be maintained which will cause increased in compliance cost.
Again according to the OECD, the country with the highest national income tax rate is the Netherlands at 52 percent, more than 12 percentage points higher than the U.S. top federal individual income rate of 39.6 percent.
The income tax is flawed for a number of reasons — it discourages economic growth and encourages a bloated government. ... It's true that wealthy citizens usually can afford to pay more taxes on their incomes and investments (dividends and capital gains).
Because progressive income taxes have such a negative effect on the economy, they tend to make everyone worse off. ... The taxes cause incomes adjusted for the cost of living to decline, leaving everyone worse off than they would be under a flat tax system that raises just as much tax revenue.
Advantages of a flat tax
For example, a flat tax system is much simpler than a progressive one, making it possible for all individuals to fill out their own tax forms. A flat tax also would eliminate virtually all compliance costs (e.g., monies paid to professional tax preparers) and reduce red tape significantly.
Tax Figures
| Grossed income | Tax Rate (%) |
|---|---|
| Php 30,000 – 70,000 | 15% |
| Php 70,000 – 140,000 | 20% |
| Php140,000 – 250,000 | 25% |
| Php 250,000 – 500,000 | 30% |
The most straightforward way to calculate effective tax rate is to divide the income tax expenses by the earnings (or income earned) before taxes. For example, if a company earned $100,000 and paid $25,000 in taxes, the effective tax rate is equal to 25,000 ÷ 100,000 or 0.25.
Updated March 2018 Page 2 2 Starting January 1, 2018, compensation income earners, self-employed and professional taxpayers (SEPs) whose annual taxable incomes are P250,000 or less are exempt from the personal income tax (PIT). The 13th month pay and other benefits amounting to P90,000 are likewise tax-exempt.
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