A proportional tax could also be called a flat tax rate. It is a system under which the percentage of tax taken from income, or charged to individuals, remains the same no matter how much is made or how much is spent. The US does not have a proportional tax on income, and instead employs a progressive tax system, where higher incomes are taxed at higher amounts than are lower incomes. The reasoning behind this is that people with less money have a more difficult time paying taxes. A person making just slightly above the poverty rate will pay a much lower percentage of their income in taxes because they need that income in order to survive.

The US does have some proportional tax types. Sales tax for instance is a constant where it is applied, though the percentage can vary if cities add additional taxes to sales tax. Person A, who lives in City B will pay the same rate in City B for all items considered taxable. He might pay more or less in another city or in another state if he travels or moves.

Some argue that the proportional taxes on most goods are most difficult to pay for those who are poor. Rich or poor pay the same taxes on a box of detergent, but it hurts the poor man or woman’s pocket more when they have little money to spare. These arguments tend to suggest that a proportional tax on sales goods really represents a regressive tax. Poorer people will use more of their income than will rich people to pay for same goods.

A regressive tax in general can be defined as a tax that tends to impact the poorest people the most. Whereas, the wealthiest people tend to pay the least amount of their income under such a situation. There has been some discussion in the US of converting to a flat tax rate or a proportional tax. Yet again, those who argue against such a tax claim it is regressive. Even though the tax rate remains constant, those least able to afford the tax have to pay it, with no exceptions.

Consider a proportional tax of 10% on income. The person who makes $200,000 US Dollars (USD) a year would pay $20,000 USD a year in taxes. That seems like a lot, but it still leaves this consumer with $180,000 USD of income. In contrast, the person making $10,000 USD a year pays $1000 USD in taxes, leaving him or her with $9000 a year to meet all expenses.

Those who argue against a flat tax or proportional tax say that an inflexible rate would make it that much harder for the poor to survive. The wealthy might be able to afford to lose $20,000 USD, but can a poor person really afford to lose $1000 USD? It’s pretty difficult to attempt to live on $9000 USD a year, especially if sales tax for most items remains in place too.

In order to keep sales taxes from becoming burdensome, many states do not tax items like food. However, many other goods, like toilet paper or dish detergent are taxed. Moreover, proportional taxes exist on many utilities, though the working poor may be able to qualify for reduced rates on certain utilities like telephone and gas and electric service. This helps reduce the overall effect of the proportional tax, making it less regressive in nature.