This means that each person, no matter their income, will be taxed at 40%.
There are multiple ways they could be taxed, but in the first year, the government decides on a flat rate of 40%. Lastly, Jessica works as the Chief Technology Officer, and earns $200,000. John works as a Vice President, and earns $120,000 per year.
Mark works as a technician, and earns $90,000 per year. Mark, John, and Jessica are all working at the same technology firm, but in a variety of roles. The main argument against this system is that it disproportionately burdens the poor because they have less disposable income to pay the same rate at the rich. Many also believe that a flat taxing system would be easier to comply with and more equitable for taxpayers. Many leading economists, financiers, and political figures view this system as a fairer taxing policy than the current one. It simplifies all of the current brackets down to one. There wouldn’t be an incremental income bracket system. Under a flat system each taxpayer would pay the rate of tax on all of their income. What is the definition of flat tax? The concept of a flat tax rate has been discussed as an option for the US tax code for many years It’s an appealing and intriguing concept because it does away with the unfair and disproportionate progressive tax system that we have today. In other words, all taxpayers would pay the same percentage of their income to the government irrespective of their total earnings. Definition: A flat tax, also called a proportional tax, is an income tax that enacts a constant proportional rate to all taxpayers regardless of income.
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