What is a Proportional Tax?

Definition: A proportional tax, also called a flat tax, is an income taxation system where every taxpayer is subject to the same tax rate regardless of income level or status.

What Does Proportional Tax Mean?

What is the definition proportional tax? This is known as a flat tax because the rate doesn’t increase or decrease at different income levels or brackets. It simply stays flat no matter how much income an individual makes.

There are many institutions and individuals who strongly support a flat tax system because it’s fairer to all taxpayers in the country. The opponents, however, disagree by stating that the rich would benefit from this system while the poor would be burdened with a higher tax bill. They argue that poor have less disposable income than the rich and thus are less able to pay the same percentage.

Regardless of its merits and drawbacks, the US taxation system is overly complicated and is unlikely to be simplified to this extent.

Let’s look at an example.


If Joseph and Tyler both had steady jobs with guaranteed incomes for the year and lived in a country that imposed proportional taxes, both men would be required to pay the same percentage of their income to the system. The difference in payment would lie in the amount of money earned by each man and the implications would lie in their necessities and liabilities.

Let’s assume their flat tax rate is 13 percent. If Joseph earned $100,000 a year as a surgeon, he would owe the government $13,000 at the end of the year. On the other hand, if Tyler worked as a general manager at a grocery store and earned $60,000, he would owe $7,800. Both paid a ratable portion of their income. Tyler paid less because he earned less and Joseph paid more because he earned more.

When other factors come into play, the tax burdens may fall more heavily on the workers who earn less. Let’s assume they live the same lifestyle with the following expenses:

  • Rent: $24,000
  • Meals: $7,200
  • Vehicle: $5,400
  • Insurance: $3,000

After those taxes and expenses, Tyler would be left with $12,600 to pay for all other expenses or save. On the other hand, Joseph would have $47,400.

Summary Definition

Define Proportional Taxes: Proportional tax means a taxation system where tax rates remain the same for every individual in the system no matter what their income levels are.

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