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


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | 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