What Is a Flat Tax? A flat tax is a single tax rate applied to all taxpayers regardless of income. Employing a flat tax means that taxpayers cannot take deductions or exemptions.

Advantages of a flat tax For example, a flat tax system is much simpler than a progressive one, making it possible for all individuals to fill out their own tax forms. A flat tax also would eliminate virtually all compliance costs (e.g., monies paid to professional tax preparers) and reduce red tape significantly.

Flat taxes usually bring lower tax bills for high-income households and, because of that, they produce less revenue than graduated taxes during times of rising inequality. For most families, however, there is nothing inherently “low tax” about flat taxes.

Four of these flat rate structures (Colorado, Illinois, Michigan, and Pennsylvania) are enshrined in the state constitution and are therefore difficult to reverse. But although flat rate income taxes have received a flurry of interest in some states, graduated rate taxes remain far more common.