Question : What is a flat tax?
Option 1: A tax system where everyone pays the same percentage of their income
Option 2: A tax system where only the wealthy pay taxes
Option 3: A tax system where only the poor pay taxes
Option 4: A tax system where corporations pay taxes
Correct Answer: A tax system where everyone pays the same percentage of their income
Solution : The correct answer is (a). A tax system where everyone pays the same percentage of their income.
A flat tax refers to a tax system in which all individuals or entities are subject to the same tax rate, regardless of their income level. Under a flat tax system, the tax rate remains constant regardless of how much an individual earns or the source of their income.
In a flat tax system, the percentage applied to taxable income remains uniform across all income brackets. For example, if the flat tax rate is set at 15%, every individual, regardless of whether they have a high or low income, would pay 15% of their taxable income as taxes.
It's important to note that a flat tax system is different from a progressive tax system, where tax rates increase as income levels rise. In a progressive tax system, higher-income individuals generally pay a higher percentage of their income in taxes compared to lower-income individuals.
