![]() ![]() ![]() Lower income families pay a greater percentage of their discretionary income.Īlthough you would pay the same percentage with a flat tax, having a lower income is a disadvantage in this system. As you earn more, then you pay a greater percentage in each segment. Progressive systems require taxpayers to send in a specific percentage of income based on where their income falls in each tax bracket. There would be less confusion with the tax code. Moving to a flat tax system would eliminate the changes in withholdings, potentially saving independent contractors and freelancers a lot of money.ģ. ![]() If you are self-employed, then a progressive tax system will treat you as an employer and employee simultaneously. When people have more of their money to keep, then they spend more of it at local businesses. A flat tax often increases government revenues.ĭuring the first years of a flat tax, revenue gains can increase by as much as 10% for the government because of higher levels of consumption. Whether you earn $10,000 or $1 million, this idea would charge you a flat rate of a pre-determined percentage, such as 15%. One way to create a “fair” system of taxation is to charge every person and household the same percentage. ![]()
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