Flat Tax Law and Legal Definition

Flat tax is a fixed tax rate as the taxable income increases. By imposing flat tax, the same percentage of income is taken in by the government from all income groups. The imposition of this kind of tax does not regard the rich and the poor differently. This is applicable to individual taxes as well as to an entire tax system. By imposing flat tax, equal tax incidence is maintained without considering the ability to pay. This is also known as proportional tax.