So if you compare two individuals with an income under $160,200, the tax is proportional. Above that income level, you no longer have to pay the tax. But that 6.2% only applies up to a particular income level - $160,200 as of 2023 (an increase from $147,000 in 2022). For example, everyone pays the same rate of 6.2% (as of 2023) toward the Social Security tax, which funds the Social Security program that provides income to older individuals. So even though everyone in a community pays the same sales tax rate, it’s not a flat tax.Īdditionally, some taxes are proportional up to only a certain point. When people refer to taxes as being proportional (aka flat), it generally refers to the percentage of income the taxes add up to. The United States doesn’t have many examples of proportional taxes. A proportional tax is also considered a flat tax, but one that requires everyone to pay the same percentage of their income toward the tax.
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