If you pay lower rate tax - 10% - then you can reclaim some tax from the Inland Revenue.
Under Cameron, basic rate tax payers would no longer have to pay tax on the interest from their savings.
But the cut-rate tax is good only through 2008, after which the maximum federal rate on dividends pops back up to 35%.
Indeed, the popularity of flat rate tax has already forced some of the earlier adopters to lower their rates, particularly on corporate income.
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Yet as time passes, flat-rate tax systems may become increasingly entrenched.
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The Gift Aid scheme is for gifts of money by individuals who pay UK tax, and allows the charity to reclaim the basic rate tax on the donation.
Tax compliance increased and the inflation-adjusted revenues from the personal income tax rose more than 20 percent annually during the three years following the adoption of the flat-rate tax.
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Even if your withholding rate rises because of possible tax-rate increases after 2012, you can develop a tax-deferral strategy if the flat rate is less than your marginal tax rate.
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But the dividends are received by investors as if they have already paid basic rate income tax (the corporation tax rate is about the same as the basic income tax rate).
But Conservative Party chairman Grant Shapps told the same programme the top rate tax cut was a "red herring" and pointed to the removal of millions of people on lower pay from income tax.
Since 1978, the top earned income tax rate fell to 35% from 50%, the top capital gains tax rate fell to 15% from 39.9%, and the highest dividend tax rate fell to 15% from 70%.
The tax rate, particularly the marginal tax rate, which is the tax rate that applies to the last dollar earned, determines how much the producer is allowed to keep out of what he or she produces.
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One of her first actions was to introduce the poll tax or community charge, a flat-rate tax for local services which was based on individuals rather than the value of the property in which they lived.
Mr Osborne said pension, education and welfare reform was helping to make the UK a more competitive economy, while cuts to corporation tax and higher-rate tax were making the country a more attractive place to do business.
But it is unclear how the plan would be administered, how many would qualify, or whether or not it will be limited to basic rate tax payers to ensure it is not criticised for funding those who can more easily meet their childcare costs.
As you know, the President and Congress are debating increasing the capital gains tax rate and changing the tax rate on dividends to fall in line with ordinary income tax rates so for those in the highest tax bracket, taxes on dividends could go from 15% to 39.6%.
They would see their income tax rates jump by nearly 20%, the capital gains tax rate increase by nearly 60%, the total tax rate on corporate dividends increase by nearly three times, their Medicare payroll tax rate increase by 62%, and the death tax rise from the grave with a 55% rate.
No Republican, not even Ron Paul, is going beyond the status quo to insist that top marginal tax rates must be cut by at least a third (ideally scrapping the current income-tax system altogether and replacing it with a pro-growth, low-single-rate tax system that does not punish saving, investing and entrepreneurial risk-taking as the current progressive income tax does).
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As a result, the top two income tax rates will jump nearly 20%, the capital gains tax rate will soar by nearly 60%, the tax on dividends will nearly triple, the Medicare payroll tax rate will skyrocket by 62% for these disfavored taxpayers, and the death tax will rise from the grave with a 57% rate increase.
They ignore the fact that there is a difference between your marginal tax rate and your effective tax rate.
If multinationals are guaranteed a lower tax rate from the progressive, statutory corporate income tax rate of 35% in exchange for closing tax credits, then small businesses that have enough revenue will either rush to incorporate to get the same benefit now that their tax credits have been removed, or jam their congressional leaders phone lines asking for the same cut to the statutory rate.
And they almost never note that the statutory tax rate applies only to the last dollar earned or that the effective tax rate is substantially lower even for the richest taxpayers and largest corporations because of tax exclusions, deductions, credits and the 15 percent top rate on dividends and capital gains.
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For all intents and purposes, the top income tax rate IS the small business tax rate in America today.
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If you want to come to me with -- or come to our economists with an example of a company with a thousand workers that files on personal income tax -- files under the personal income, is an S corps -- because we're talking -- I think you may be confused here with the corporate tax rate here and the individual tax rate.
As a result, if the Bush tax cuts simply expire for these higher income earners, the top 2 income tax rates will go up by nearly 20%, the capital gains tax rate will soar by nearly 60%, the tax on dividends will nearly triple, the death tax rate will rise by nearly a third, and the Medicare payroll tax will explode by 62% for these targeted taxpayers.
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The manifesto confirms its ambitions on tax: for a lower 10p starting rate of income tax, for a cut from 8% to 5% in value-added tax on fuel, and for no increase in the 23p basic rate nor the 40p higher rate of income tax.
But is a 33.7 average tax rate a tax cut or a tax increase?
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It wants the administration to lower the 35% (nominal) corporate tax rate through tax reform.
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But, best of all, Bulgaria has a flat tax system with a 10% income tax rate and a 10% corporate tax rate.
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Beginning in January 2001, the newly elected Putin administration shifted to a 13 percent flat-rate income tax and also sharply reduced the payroll tax rate.
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