What is a flat tax? - KLTV.com - Tyler, Longview, Jacksonville |ETX News

  • Now that you've read the story, which tax system do you think is better?

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    Flat tax system
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What is a flat tax?

LONGVIEW, TX (KLTV) - Governor Perry isn't the only GOP candidate to propose a flat rate income tax-- other candidates have and more still may.

Right now the United States has a progressive tax on income. That means the more money you make, the more taxes you're responsible for paying.

But under a flat tax that doesn't matter.

"It doesn't matter how much income I'm making, I'm still going to pay the same portion of that in tax," said LeTourneau Business Administration Professor John Feezell.

Most people we talked to weren't really sure what a flat tax was. But those who were, didn't think it sounded too bad.

"Better than what we've got," one Longview citizen said.
"It may be good.. I don't know all of the aspects of it," said another.
"If it helps my family save money then yes, if it doesn't then no," said a mother in Longview.

And that's really the bottom line for a lot of people. Is a flat tax going to help or hurt them financially.

LeTourneau business professor John Feezell said it depends on the specifics of the plan but if he had to guess, "Lower income individuals probably wouldn't be affected by it very much. What it would affect is individuals in the higher marginal brackets, they would then pay a larger portion because they might not have the exemptions they have now," Feezell said.

So even if you were paying taxes at a lower rate than before, you could actually be paying more because more of your income could be considered taxable. Feezell said it all depends on those exemptions.

Feezell said there are pros and cons to both tax systems.
But, a it's likely a flat tax would create more revenue for the government and prohibit them from changing the tax rate on people based on income class.

Feezell said many European countries operate successfully using a flat tax.

Copyright 2011 KLTV. All rights reserved.

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