Gross annual income refers to all earnings before any deductions are. What would a flat tax do?Ī flat tax refers to a tax system where a single tax rate is applied to all levels of income. Progressive taxes, however, treat the rich and poor differently, which is also unfair. Both of these systems may be considered “fair” in the sense that they are consistent and apply a rational approach to taxation. No one pays more or less than anyone else under a flat tax system.
Some drawbacks of a flat tax rate system include lack of wealth redistribution, added burden on middle and lower-income families, and tax rate wars with neighboring countries. A flat tax is a system where everyone pays the same tax rate, regardless of their income.
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