Flat tax

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Flat tax

A tax which is levied at the same rate on all levels of income. See also progressive tax.

Flat Tax

A way to structure an income tax where everyone (or nearly everyone) pays the same marginal rate. For example, a flat tax may be set at 15%, and everyone will pay that rate regardless of how much they earn. This contrasts with progressive taxation, where the marginal tax rate increases with increased income. Proponents of a flat tax argue that it provides an incentive for people to earn more (because they keep more of what they earn than under a progressive tax system), which in turn spurs economic growth. Opponents contend that a flat tax deprives the government of revenue and progressive taxation does not disincentivize earning more because, even at higher rates, people keep more after taxes than they would have done if they earned less.

flat tax

An income tax that has a single rate of taxation. For example, a taxing authority may levy a flat tax of 3% against gross income. See also graduated flat tax.

Flat tax.

A flat tax, also known as a regressive tax, applies to everyone at the same rate, as a sales tax does.

Advocates of a flat income tax for the United States say it's simpler and does away with the kinds of tax breaks that tend to favor the wealthy. Opponents say that middle-income taxpayers would carry too large a proportion of the total tax bill.

References in periodicals archive ?
With this Flat Tax plan there's no need to pay a tax preparer, accountant or attorney.
17 /PRNewswire/ -- Following is a statement by Art Godi, president of the National Association of Realtors, in response to the flat tax plan announced today by presidential candidate Sen.
The Armey & Shelby Flat Tax Plan, which would make all interest, dividends and capital gains non-taxable.
Perry has designed his plan with the help of publishing magnate Steve Forbes, whose own 17 percent flat tax plan was the linchpin of his unsuccessful 1996 and 2000 runs for the Republican presidential nomination.
Forbes, hoping to revive his struggling candidacy, promoted his flat tax plan and played on the anti-Washington sentiment easy to find in the West.
With that quip, Forbes dived into his stump speech, carefully explaining what he sees as the virtues of his 17 percent flat tax plan, but also delivering one-liners aimed at his opponents with more ease and humor than he has in the past.
Under the various flat tax plans, many forces might act to change the new equilibrium interest rate.
Of the flat tax plans they would have the most negative impact on the municipal bond market.
The flat tax plans would eliminate the deductibility of state and local taxes and would eliminate the current tax preference for tax-exempt municipal bonds, because federal taxes would no longer apply to the interest payments to individuals or corporations from corporate bonds.
The opening salvos of the GOP Presidential campaign debate in Iowa reverberated in the nation's capital last week with the introduction of a series of rival federal flat tax plans and a GOP national commission report.