Refers to a tax system that utilizes the same marginal tax rate across individual taxpayers or businesses. Opposite of the progressive tax structure, this method ensures that higher income earning entities don’t pay a proportionately higher amount of taxes.
A flat tax is not commonly used in the United States, especially on income, but is seen in practice through the use of payroll taxes, whereas all wage earners are taxed the same. Some countries have employed this system, but are considering moving towards a more progressive structure to increase tax revenue.
