flat tax

noun

Definition of flat tax

Examples of flat tax in a Sentence

Recent Examples on the Web The League’s description of the program includes scrapping a pension reform that raised the retirement age, blocking immigrants arriving on Italy’s coasts and a flat tax for families and companies. John Follain, Bloomberg.com, "Italy's Populist League Gives Public a Say on Coalition Program," 19 May 2018 Johnson and Walker-Peddakotla also called for voters to approve the fair tax question on the November 2020 ballot, which would amend the state constitution to change Illinois from a flat tax to a graduated income tax. Steve Schering, chicagotribune.com, "Kim Foxx, local officials lead community safety forum at Oak Park Library," 10 Dec. 2019 In 1995, South Korea replaced its flat tax for waste disposal with a new system. Rivka Galchen, The New Yorker, "How South Korea Is Composting Its Way to Sustainability," 2 Mar. 2020 Do socialists plan to impose a flat tax rate on all to fund their new programs — so everyone has skin in the game — or to establish regressive taxes to do so, as with Social Security and Medicare? Letter Writers, Twin Cities, "Letters: Capitalism isn’t perfect, but it lifts societies out of poverty," 21 Oct. 2019 But more recently, some states and cities are adopting tax rates that go up as the value of the property increases, similar to income tax rates that go up as your income increases, rather than a flat tax. Anna Bahney, CNN, "Your home may not be a mansion. But you might still have to pay a 'mansion tax'," 29 Oct. 2019 Under Connecticut’s current hybrid system, drivers pay a flat tax rate of 25 cents per gallon. Christopher Keating, courant.com, "Connecticut among states studying regional gas tax," 25 Oct. 2019 There needs to be an income tax, or a flat tax or some kind of tax. Alex Demarban, Anchorage Daily News, "At hearing, Alaskans call for compromise as Legislature remains split over the dividend," 16 July 2019 Both chambers had called for replacing the flat tax with Ohio’s higher individual rate. Andrew J. Tobias, cleveland.com, "State budget deal keeps business tax deduction, film tax credit," 16 July 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'flat tax.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of flat tax

1952, in the meaning defined above

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Time Traveler

The first known use of flat tax was in 1952

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Last Updated

24 Apr 2020

Cite this Entry

“Flat tax.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/flat%20tax. Accessed 4 Jun. 2020.

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More Definitions for flat tax

flat tax

noun

Financial Definition of flat tax

What It Is

A flat tax is a system under which all taxpayers pay taxes at the same percentage rate of their total income.

How It Works

Let's assume that you had $100,000 of taxable income last year. Under a progressive tax system, you might be taxed 0% on the first $25,000, 10% on the next $50,000, and 30% on the remaing $25,000, for a total tax bill of (0 x $25,000) + (0.10 x $50,000) + (0.30 x $25,000) = $12,500. Under a flat-tax system, you might instead simply owe, say, 15% of your taxable income, or $15,000.

[InvestingAnswers Feature: The Most Important Tax Changes to Know Before Filing Your Tax Return]

Why It Matters

The concept of a flat tax is controversial, and many economists and politicians have introduced many different twists and forms of the idea. In many proposals, the flat tax would not apply at all to incomes below a certain amount.

Supporters say flat taxes incent people to work harder, earn more, and engage in wealth-creating activities because the current progressive system penalizes people who make more money (by putting them in higher tax brackets and thus taxing that incremental income at a higher rate). In this vein, supporters say a progressive tax system does not encourage entrepreneurship. Supporters also say the current tax system is too complicated, and that the system of credits, deductions, exemptions, etc. offers too many loopholes with which to take advantage of the system.

The notion of whether the flat tax is "more fair" is perhaps the most controversial aspect of the idea. Under the system, a person with 100 times more income would pay 100 times more in taxes, but that person would be paying the same percentage of his income in taxes as a low-income person would pay.

[InvestingAnswers Feature: How to Avoid an IRS Audit]

Source: Investing Answers

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More from Merriam-Webster on flat tax

Thesaurus: All synonyms and antonyms for flat tax

Rhyming Dictionary: Words that rhyme with flat tax

Britannica.com: Encyclopedia article about flat tax

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