What is a flat tax?
A flat tax is a tax on income where the tax
is a certain percentage of income. Flat tax is income tax
which is unlike today's multiple levels of taxation. Income tax
today has many levels of taxation depending on how much
income is made.
One of the disadvantages of a flat tax
One of the disadvantages of a flat
tax is that flat tax system will have fewer tax
deductions than today's taxation system. The flat tax
system could possibly offer no tax deductions at all.
An example of flat tax might be that everyone pays 20% of their
income in tax. People who are in favor of the flat
tax claim that flat tax would make the tax laws much
simpler and fairer than the tax laws are at the present
time. The flat tax pros and cons continue to be discussed
in a flat tax debate that is often present in political
National sales tax
A national sales tax would be just like
today's state sales taxes and local sales taxes. One of the
disadvantages national sales tax was that it would be
set at a much higher rate than the current sales tax
system. One proposal for national sales tax was for a 15% sales
tax. The national sales tax was intended to replace the income
Under either flat tax system or national
sales tax system, there would still need to be some federal
agency (like the IRS) to enforce the tax laws. Efforts to
enforce the tax laws can be through an audit
of small businesses and the self employed or retailers who
fail to report sales. Small businesses and the self employed
are more likely to fail to report income under a flat tax
system. Either way, the IRS is not likely to disappear in
the near future.