A Flat Tax Is A System Of Taxation

1713 Words Apr 19th, 2016 7 Pages
A flat tax is a system of taxation that taxes at a uniform rate, regardless of income level. In the United States we currently use a progressive tax system, meaning that high-income earners pay taxes at a higher rate than low-income earners. A flat tax rate is a tax system with a constant marginal rate, which is applied to individual income. There are various tax systems that are labeled a flat tax even though they are significantly different. A true flat rate tax is a system of taxation where one tax rate is applied to all personal income with no deductions. A flat tax is a tax that is applied at a consistent rate with no variables in its application. In contrast with progressive or regressive taxes, where the rate that is applied varies by income. a flat tax means that everyone pays the same percentage. Technically, flat taxes can be applied as sales or excise taxes, but usually the term refers to the proposal of a single rate for all taxes on personal income. When a flat tax is applied across the board, it would also increase the tax burden on those with lower incomes, many of whom currently pay little or no income tax. For all of these reasons, most current flat tax proposals should be called “modified “flat tax proposals. These modified plans usually include an income level beneath which no taxes are paid, a number of allowable deductions like charitable contributions and home mortgage deductions and different rates, for business income. There are also “hybrid” tax…

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