Theme 3: Fairness in TaxesLesson 4: Proportional Taxes
With a proportional or flat tax, each individual or household pays a fixed rate. For example, low-income taxpayers would pay 10 percent, middle-income taxpayers would pay 10 percent, and high-income taxpayers would pay 10 percent. The sales tax is an example of a proportional tax because all consumers, regardless of income, pay the same fixed rate.
Although individuals are taxed at the same rate, flat taxes can be considered regressive because a larger portion of income is taken from those with lower incomes. For example, a 6% sales tax on a $1,000 computer ($60) would take a greater portion of a $10,000 income than of a $50,000 income. |
materials:
Activities
 Activity 1: Proportional Taxes and You Find out how income is affected in a proportional tax system. Activity 2: Comparing State and Local Retail Sales Taxes Learn more about state and local sales tax. Assessment
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What do all income levels have in common in a proportional tax?
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Did You Know?
One of the world's oldest tax systems was proportional. In the days of the Old Testament, a "tithe" or tenth of a person's income was collected for religious purposes. The custom of tithing was continued by the Christian church and was the main funding for the many splendid cathedrals that were built in Europe.
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