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


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
©2004-2016 Investor Glossary - All rights reserved - Terms of Use