Legal Definitions - flat tax

A flat tax is a type of tax system where everyone pays the same percentage of their income, regardless of how much money they make. It is called a "flat" tax because the rate stays the same for everyone.

• If the flat tax rate is 10%, then someone who makes $20,000 a year would pay $2,000 in taxes, and someone who makes $200,000 a year would pay $20,000 in taxes.
• Some countries, like Estonia and Russia, have implemented a flat tax system.

These examples illustrate how a flat tax works. In the first example, both people are paying the same percentage of their income, even though one person makes ten times more money than the other. In the second example, we see that some countries have chosen to use a flat tax system instead of a more complicated tax system with different rates for different income levels.