And why not a straight tax?

It is not a mystery and it is a historical problem of tax dogma: Proportional or progressive income tax? That’s what flat tax is all about. Of course the first answer is that they must be progressive. Whoever earns more pays more, that’s the point.

But I want to start by describing the current situation, when it is recognized that at least 50% of the economy is informal (in our slang). This hidden mass of taxpayers does so out of necessity, as they would not be able to continue operating if they had to engage in “formality”. This is public, notorious and not worthy of discussion. It is our reality and we have to accept it.

We have rates from 7% to 35% for humane and ideal people, but income tax has never reached the first place on the podium, at various times it has been second and even third when it should have been first, if there was a tax system that we do not have .

Argentina is special and differentso the tax formulas in force in other countries have never worked in these parts, coincidentally because it is strange and different. So are we going to continue with the app as always, or are we going to allow ourselves to change?

We are facing a new one moratorium and money launderingwhich is part of the national folklore but actually indicates and demonstrates the frustration and disaster of what we have as taxes in the national order because it cannot be considered a “tax system” when in fact it is absent and the 50% “black” economy clearly shows this.

In the face of disruptive proposals, there have always been voices advocating a “progressive system” in the income tax, invoking equity, contributing capacity, equality of public charges, etc., but it is never denied that the federal fiscal authority has come to the conclusion that it cannot encourage , inciting, provoking, stimulating “alleged taxpayers” who are in the comfort zone of not paying taxes to switch to the current “tax system”.

It also fails to recognize that there are taxable transactions subject to pro rata rates within the legal regime, such as dividends and property transfers.

That’s clear “alleged taxpayers” refuse to formalize for if they do, they will disappear, and the fiscal authority will be “hunting in the zoo” as always, and if they ever take action against any of them, they will disappear, because they bear no tax burden.

Then from time to time we return to money laundering and moratoriums, which shows the incompetence and frustration of the tax burden in the national order. This is a historical reality.

So what is the proposal?: a flat or proportional tax at a rate of 10% and simple and specific deductions for both human and ideal persons.

A tax that all residents understand, without having to take special courses to understand the rules and other courses to fill out applications.

I’m not making anything up because it’s a historical topic and the interested party can start with “flat tax”. Hall and Robber and continue through numerous works, presentations and countries that have applied or are applying it. At a time when structural changes are being implemented, it should be one more, to which I add that this rate, 10%, should also be the VAT rate.

I don’t know what the numbers can say because I’m not an actuary or an economist, but if we have a 50% informal economy, shouldn’t we at least question all the statistics that are being spread about gross product? to economic activity to tax pressure. Let’s think for a moment. Are the numbers believable? Do they reflect the economic reality of the country? Do they explain what should be collected?

Am I questioning everything? Yes, because the “whole” is a part, not the whole. It hurts, but it’s a story we accept and believe and avoid reality. The truth tells us that it would be important for almost 100% of taxpayers to contribute in taxes, because they are paying something that is economically viable today. They do it because the risk of not paying is not justified and I am not talking about dodging because they will not make a single maneuver for it, they are simply out of the system.

A distinguishing feature, apart from the rate, should be taxes that are easy to pay and understand, the latter being of the utmost importance in our opinion.

With a simple and direct VAT without so many folds (which existed since the beginning of the tax, remember that to know if a product was taxed or not you had to go to the Brussels customs nomenclature) and simpler in income tax, accept deductions that would be specifically detailed, would eliminate technical problems, with universal access and understanding. Let all residents understand this.

Is the design disruptive?: Yes; Are you opposed to all the doctrine and history accumulated about the application of these taxes? Yeah; Have we been successful with what has been designed and implemented so far?: No; Do we have an economically and fiscally normal country?: No; Are we in a state of exceptionalism?: Yes… so why do we keep insisting on what has been wrong with us for the last half century and not try to change it? Because there is no political decision.

Is the change technically possible? What happens to public accounts? It was an unresolved issue like what came before: the chicken or the egg?

A change accompanied by strong tax dissemination and education, which reaches all residents in a didactic and concise manner, would be essential.

In parallel, we will end the habit that the application is above the national constitution. Be serious at least once and be available to the taxpayer and not the taxpayer available to the collection agency.

The various regulations issued near the end of the tax benefit regime show a lack of respect for the taxpayer and his advisers.

Let’s start again with “something possible” and another. Why not?

The author is a lawyer, a consultant in tax issues