A simpler tax and benefits system

The current benefits system is labyrinthine, and needs to be simplified[1]. But then, so is the tax system. Did I read somewhere that this year’s tax guide is twice as long as last year’s? In trying to make it fairer, we just make it more complicated. Whitehall mandarins create sustainable jobs (for themselves) but not a lot more.
The issues:

The rich should want to stay in Britain and pay taxes which contribute to society.
The poor should have enough left over that they can spend and prop up the economy.
The in-between should feel rich, consume, and generally help the commercial wheels to turn.
Those who need support from the state should receive it, no child should be brought up in poverty or deprivation, and all should have an equal chance.
There should be no barriers to taking a job, for example where the reduction in welfare is so fast that you are worse off if you take a job.
There should be little incentive to avoid or evade tax.

The Proposal
What about a flat rate of tax for everyone, from the first penny they earned, and a flat welfare payment to everyone, regardless of their wealth? The payment would be set both to meet the minimum needs of welfare for the poor, and to make up for the lack of a stepped income tax for the rich. So if you earn over £5400, then you would normally receive the first amount untaxed and only pay tax on anything over this. An alternative is to tax you on the lot, but pay you back an equivalent amount. So if you have dependents such as children, or people needing care who don’t have an income of their own, your welfare payment is adjusted accordingly. We get the same result with the current tax system, only it takes a lot more people a lot more effort to work out – and all the while these people aren’t contributing to the economy they are only marking and performance managing it. So you get enough in to live on. You take a job, and suddenly you are taxed 40p in the £. No decrease in the basic amount you live on, the remaining 60p in the £ goes straight into your pocket (or on travel, but there will be some left over). I don’t think people want to avoid paying tax, they are just aware of the impact that declaring an income will have on their welfare payments. Remove that dis-incentive and I think more people will pay tax.
There – very simple.
What happens to all the benefits staff and tax staff who currently operate the (much more complicated) system? They can do things that contribute to the economy, like service industries, manufacturing, creating wealth. Will they mind? I would hate to become aware, after 40 years in a job, that all I had achieved was to slow things down – I’d much rather look back on a contribution that I’d managed to make.
Reference

Dynamic Benefits: Towards Welfare That Works" A Policy Report by the CSJ Economic Dependency Working Group [16/09/2009] – centre for social justice