flat tax investment & finance definition

A system of income tax in which each taxpayer pays the same percentage of tax on their income, irrespective of income level. It contrasts with the progressive income tax system presently used in the United States, in which those making more money have a higher tax rate than those who have less income. Critics of a flat tax say that it is regressive and unfairly hurts poor people. Proponents of a flat tax approve of its simplicity and say that everyone should pay the same rate.