Injustice in the taxation of wage earners

The success of public services relies on the existence of continuous and steady public revenue. Public services must continue without interruption. For this reason, public revenues such as taxes, duties, and fees must be collected in a short time within specific periods. Two criteria are applied when collecting taxes. One is the benefit theory, and the other is the authority theory, or the ability-to-pay theory. In our country, according to both the Constitution and tax laws, taxes are theoretically collected based on the ability-to-pay theory. That is, more from those who earn more, and less from those who earn less. However, when we look at the implementation, we see that less tax is collected from those who earn more, and more tax is collected from those who earn less. For the ability-to-pay theory to function correctly, tax expenditures, exemptions, and exceptions must be minimal, tax morality and compliance must be high, and there should be no tax amnesties.

Today, approximately 75% of taxes are collected from expenditures, and 25% from income. Wage earners pay 60% of this 25% tax collected from income. While taxes are deducted from wage earners at the source through withholding before they even receive their wages, corporate income tax payers pay their income tax 15 months later. However, it is also a fact that they do not pay these taxes fully and accurately. In our country, where tax loss and evasion are at 85%, how correct is it to pay taxes 15 months later? Furthermore, the amnesties issued every year serve as a reward for this situation.

While a fixed, or flat, rate of 25% is applied to commercial companies in terms of corporate tax, a progressive rate is applied to wage earners. The lowest tax rate starts at 15% and continues as 20%, 27%, 35%, and 40%. This creates a ruthless tax injustice for wage earners. After the first three or four months, there is a monthly reduction of 2,000 TL to 5,000 TL in the wages of employees.

In other words, in this situation, wage earners do not receive 12 months of wages, but rather 11 or 10 months of wages. Tax brackets have been rearranged for 2024. The tax base, which was 70,000 TL for the 15% tax bracket, has been increased to 110,000 TL for 2024. In this case, there will be a decrease of between 2,000 and 5,000 TL in the wages of employees after the first three or four months of 2024. For wage earners, instead of progressive taxation, a switch should be made to flat-rate taxation, and this rate should be exempt from tax up to the minimum wage amount, while the amount above the minimum wage should be a flat rate of 10% for one year. To prevent this tax injustice for employees, the political power must urgently change this from a progressive rate to a flat rate.