A flat rate tax was a common taxation practice in earlier times, and in the last few decades has been revisited by numerous politicians as the best plan for pursuing fair taxation. A few countries have recently instituted the flat rate tax, including several of the Baltic countries. Other countries are considering it, since some people believe a flat rate tax is the fairest type of taxation program available.

The flat rate tax can be compared to a progressive tax rate. With progressive rates, percentage of income deducted for taxes increases with more money made. The lowest incomes pay very little in taxes, while higher incomes pay a far greater percentage of their income. These percentages can be mitigated in part by the number of deductions and tax breaks a person is able to take, lowering the amount of what is considered taxable income.

Most propositions for a flat rate tax suggest built in deductions for people, especially in the lower income spectrum. The percentage of tax applied would only be deducted from taxable income, and would be applied to individuals and corporations alike, and this percentage would remain constant for all people. Some plans call for incomes near the poverty level or below it to be exempt from taxation.

Others suggest that taxable income for people at the poverty level would be almost non-existent because of standard deductions. There’s still some question as to whether flat rate taxes would pose an undue burden on the lower middle class. Depending upon the actual amount of money earned that is considered “income,” people in the lower middle class might find themselves with much less spendable income, and have difficulty purchasing basic necessities.

Though the flat rate tax is sometimes considered the height of political conservatism, proponents of this form of taxation are certainly not always conservatives. A strong advocate for the flat rate tax is former Governor of California, Jerry Brown, who proposed this taxation form when he ran for the presidency in 1992. Brown cannot be accused of conservatism, given his strongly leftist stance in the Democratic Party.

There are a few states within the US that have flat rate tax for state taxation. These include Indiana, Massachusetts, Maryland, and Illinois. Many countries throughout the world are considering adopting this method of taxation, or already have it in place. What tends to concern people in the US when they argue against this system is the idea that percentage of tax might have to significantly increase. Proponents for the plan suggest that a constant rate wouldn’t necessarily mean tax percentages would need to be raised, since there would be a more constant rate of collection from all individuals and corporations, with fewer tax shelters and loopholes for those who make larger income amounts.