What is a flat rate tax?

The flat rate tax is the payment of the local administration for the income obtained. The rate is the same for every citizen and business, no matter how much money it is obtained. Like most tax revenue, the money collected is most often used to improve the local community in different ways. Several countries have introduced a flat rate tax, including several in Eastern Europe, such as the Baltic countries; Other countries are considering this because some people believe that a flat rate tax is the fairest type of tax program. The ongoing debate between groups, individuals and politicians exists whether the lump rate is the best system, because it may be difficult for a lower class to pay any income tax.

Similarities to the progressive system

The flat rate tax can be compared to the progressive tax rate. As part of the progressive system, the percentage of income deducted for taxes INCRESS with increasing income amount. The flat rate system is similar in that taxpayers with the lowest income pays very little, while those with higher incomes pay much more amount for taxes. This percentage may be partially reduced by the number of deductions and tax reliefs that a person can be able to take and reduce the amount of income that is considered to be taxable. However, the flat rate system is different from other progressive systems, as the tax rate is constant across the board and does not change depending on human revenues.

cous and cons of

As far as people are concerned when they argue against this system, the idea that the total tax rate could increase significantly to provide the government's amount of need for community support. Plan supporters indicate that a constant rate would not necessarily mean that the percentage of the tax would have to be increased because there would be a constant collection rate of all individuals and corporations, with less tax shelters and gaps for those whohave larger amounts of income.

Most of the proposals for a flat rate tax indicates built -in deductions for people, especially in a lower -income spectrum. The percentage of usable tax would only be deducted from taxable income and would be applied to individuals and corporations and this percentage would remain constant to all people. Some plans require income near or below the level of poverty to be exempt from taxation.

Others suggest that there would be almost no taxable income for people at the level of poverty due to standard deductions. There are several questions about whether the flat rate taxes would be a disproportionate burden for the lower middle class. Depending on the actual amount of money obtained, which is considered "income", people in the middle class can find themselves with much less income and have difficulty buying basic needs.

any evidence of this tells the economic growth in the country as a result of a flat tax rate, usually claims that supporters are causedSome other factor, such as other reforms or rapid market expansion. In countries where this system is introduced, such as many countries in Eastern Europe, other factors in any economic growth experience the country experiences. As a result, it is difficult to achieve an agreement on whether this type of tax system is effective.

Current systems

There are several countries in the US that have a flat rate tax for tax taxation. These include Indiana, Massachusetts, Maryland and Illinois. Many countries around the world are considering accepting this method of taxation or already have it on the spot - Russia, Mongolia, Baltic States and Hungary store a flat rate system on their citizens.

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