Every so often there comes before the public an idea that is simple, attractive and grossly oversold. Such an idea is the flat tax. But the discussion of the flat tax has one important virtue: it could force a debate on the shape of the tax system. The tax system that has evolved in the UK over the past one and a half decades is indeed too complex. It desperately needs reform.

The essence of a flat tax is that it has a single marginal rate. In addition, proposals for flat taxes usually include the elimination of most deductions, except for a personal allowance. These features make the tax progressive at low levels of income but close to proportional as incomes go higher.