flat tax

noun

Definition of flat tax

Examples of flat tax in a Sentence

Recent Examples on the Web

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 The flat tax is on top of the current 17.5% lodging tax rate - comprised of a state lodging tax rate of 4%, Birmingham lodging tax rate at 6.5% and Jefferson county’s lodging tax rate at 7%, according to the Alabama Department of Revenue. Hailey Auglair | Hauglair@al.com, al.com, "Birmingham City Council approves $3 lodging tax," 2 July 2019 This is a proposal to scrap the state’s flat tax on income, replacing it with a progressive one. The Economist, "More liberal, functional Illinois," 21 June 2019 In the prior year, Macron had slashed the nation’s wealth tax and established a flat tax on capital gains, earning him the moniker président des riches. Stephen Paduano, The New Republic, "The Limits of Outrage Politics," 13 June 2019 Here’s one — even just the 1 percent increase in the flat tax would be monumental to a working mother on a marginal income. Chicago Tribune, Lake County News-Sun, "Talk of the County: Hope you liberals are happy with the 'tax-and-spend idiot billionaire' governor," 10 June 2019 Austin Beutner defended the tax’s square-foot formula, calling it more equitable for lower-income households than a flat tax per parcel, as some other school systems have done. Howard Blume, latimes.com, "Parcel tax for L.A. schools is latest ask of taxpayers," 4 June 2019 The radical flat tax measure could revive the nation’s economy and employment rate -- but critics have also raised questions as to how the coalition’s program can be paid for. Adam Shaw, Fox News, "Italy on cusp of populist coalition after parties publish radical joint program," 19 May 2018

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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Last Updated

12 Sep 2019

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The first known use of flat tax was in 1952

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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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