Investor Glossary-flat taxInvestor Glossary-flat taxInvestor Glossary-flat taxInvestor Glossary-flat taxInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Flat Tax

The HTML to link to this page
 

A flat tax system has a fixed tax rate regardless of level of income. The primary advantage of a flat tax is simplicity. Not only are flat tax computations and payments very straightforward, but in theory the economy also benefits from a minimum of distorted incentives driven by tax deductions in a flat tax regime. Usually, the flat tax is understood to apply only to earned income. Many conservatives favor this flat tax formulation because it eliminates capital gains taxes. Opponents describe such a flat tax system as regressive, meaning that the poor share a disproportionate burden. In contrast, the current US tax system is progressive because high-income earners pay a higher rate than low-income earners. The name flat tax comes from the flat line that results when tax rate is plotted against income. In 1994, Estonia became the first country to implement a flat tax, and when its economy subsequently thrived other countries followed suit.



Rate this flat tax definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: ex-dividend, deferred revenue, limit order, FTSE, stock split, APR, 401a, 144a, phantom income, debt service coverage, liquidity ratio, current ratio, diluted share, LIBOR, margin rate, minority interest, ex-dividend date, reverse mortgage, dividends payable, Zero Cost Collar, covered put, balance sheet, 1035 exchange, deferred tax, per diem, VIX, class C shares, wholly-owned subsidiary, required rate of return, EBITDA, real GDP, 1031 exchange, stock market close, in escrow, risk management, inflation, quality assurance, command economy, option premium, average price per share, Key Rate Duration, irrevocable trust, annual return, open position, cancelled check, retained earnings, FICO score, labor relations, implied volatility


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use