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 because under the current progressive tax system, their income falls beneath the lowest tax bracket. 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 plans that have a small number of tax brackets. In the true sense of the word, these are actually progressive tax plans, but they...
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...ire nation benefits instead of just a select few.
6. When a person’s income falls, so does their taxation responsibilities. .
1. Inflation can push taxpayer into a higher tax bracket, with no real increase in income after adjusting for inflation
2. Individuals with high earning potential may leave the country to avoid high taxes
3. It can discourage business investment and expansion, as additional profit is taxed at higher rates
4. Imposes a discriminatory penalty on those who are able to make more from their creativity, skills, and talent.
5. It encourages the wealthy to not be transparent about their income. The wealthy are able to take alternative income methods that the working public cannot take to limit their taxation responsibilities.
6. There are other systems of taxation that require fewer hours to complete because there is less complexity involved..
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