Should we lower the tax rate?

I would have posted this in my "all purpose" blog which has not been updated for sometime due to this blog. But this topic has a bearing on the taxation subject in the 3rd year of law school.

Lawmakers are scrambling to endear themselves with the working class and the low income groups. They are shouting for every voters to hear that they favor reducing the income tax rate to 25% from 32%. The BIR insists that it will mean a loss of several billions of revenue. Proponents of the reduction said the loss could be corrected through better collection.

We've heard these arguments before especially just before election time. Pampapogi to get the votes of the would-be beneficiaries.

Who are the people to be benefited by a reduction in the tax rate? One of them would be me, of course, and other working individuals. Thanks, Mr. Congressman. But who really get to be most benefited? Who else but the rich friends of our lawmakers.

 Here's the tax rate from the BIR website:

An employee who is in the P140K to P250K bracket or below will not get any benefit. Those earning millions will stand to benefit more.

For instance at the present rate, one who is earning P10M will pay P125K for the first P500K and P3,040K for the rest. Or a total of P3,165,000.

If the tax bracket is lowered to the maximum of 25%, the congressman's rich friend will only be paying a total of P2,437,500.00.  The revenue loss will be P705,000.

I propose instead that the top bracket be increased from P500,000 to P1M and the lower brackets be reduced accordingly.

And to offset the revenue loss, because there will still be, let's add another bracket of, say, P5M and a tax rate of 35% for income in excess of P5M.

But then that will incur the ire of the rich friends and contributors of our lawmakers.