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A flat tax rate is a tax system with a constant marginal rate, usually applied to individual or corporate income. There are several versions of flat taxes. They are discussed in this entry, followed by a discussion of the countries that have flat tax systems and their effects.

Major Categories

Flat tax policies are distinguished by what is subject to taxation. The five major types are as follows.

True Flat Rate Income Tax

The true flat tax rate involves using the same tax rate without deductions and is applied across all types of incomes.

Flat Tax With Limited Deductions

This tax system allows deductions for a few items such as charitable deductions and home mortgage interest. Another form of this tax is a single, large, fixed deduction including living costs. Using ...

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