Flat tax

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A flat tax (short for flat rate tax) is a tax system with a constant tax rate.[1] A flat tax may also be called a tax in rem ("against the thing"), such as an excise tax on gasoline of three cents per gallon. Usually the term flat tax refers to household income (and sometimes corporate profits) being taxed at one marginal rate, in contrast with progressive or regressive taxes that vary according to parameters such as income or usage levels. Flat taxes offer simplicity in the tax code, which has been reported to increase compliance and decrease administration costs.[2]

Flat taxes that allow a tax exemption for household income below a cutoff level are not true proportional taxes, because, for household incomes below the cutoff level, taxable income is less than total income.

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