Proportional Taxes

Proportional taxes, also known as flat rate taxes, charge the same tax rate from all taxpayers.


The benefits of proportional taxes include simplicity, fairness, economic incentives, reduced chances of tax evasion and many more.


However, disadvantages include regressivity, inequity, impact on the poor, limited revenue stability

The formula for calculating proportional taxes often involves the tax multiplier, beginning with the Marginal Propensity To Consume (MPC)

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Functions of proportional taxes include maintaining simplicity, ensuring fairness, facilitating manageable financial planning and lot more.