![]() While this is not entirely accurate as flat tax propositions will not have everyone to be in agreement with retaining a small portion of the IRS, this system will cause the IRS to be re-adjusted, which means that some people will surely lose their jobs. It would eliminate the IRS and lead to unemployment. In this case, you will be able to spot the difference of how this system would only benefit the rich.Ģ. Now, the former would only have $900 left after taxation, while the latter would have $9,000. Beginning with Estonia in 1994, other countries that followed such a system include Latvia, Lithuania, Russia, Serbia and Slovakia.įor example, one individual earns $1,000, while the other makes $10,000, but both of them are living in a country where a flat tax system is implemented with the rate of 10%. In fact, former communist countries were the first to apply this tax reform and saw better results. Flat tax will make everything easier to report and understand.Ĭountries that have adapted flat tax have experienced economic growth. This system would not be giving tax filers a difficult time, and those at the IRS would be introduced with easy computation. When a flat tax system is implemented, other forms of taxes will be eliminated and replaced with just a single rate for everyone. So, taxpayers can do away with paying dividends, interest and other business tax. Simply put, individuals and families will not be asked to submit dividend and interest reports, or that of other business-related income. With flat tax, a section of the tax code that is biased against capital formation will be removed, not to mention that capital gains tax, death tax, savings double taxation and dividends will be eliminated. Here are the pros and cons of flat tax: List of Pros of Flat Tax While there are many advocates for this system, there are also those that oppose such. In the US, this is implemented as a progressive tax system, which means that high-income earners would pay taxes at higher rates than low-income earners. ![]() By definition, a flat tax system refers to taxation on household income at a uniform rate regardless of the level of income level. ![]()
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