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Fair Not FlatHow to Make the Tax System Better and Simpler$
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Edward J. McCaffery

Print publication date: 2002

Print ISBN-13: 9780226555607

Published to Chicago Scholarship Online: March 2013

DOI: 10.7208/chicago/9780226555669.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 30 July 2021

Progressivity Can Live

Progressivity Can Live

(p.78) Five Progressivity Can Live
Fair Not Flat
University of Chicago Press

Unlike the common flat-tax plans that would raise taxes for the middle class in order to lower them for the rich, the Fair Not Flat Tax affirms America's historic commitment to a moderately progressive rate structure. Tax relies on varying rate brackets, it involves two distinct kinds of rates. One, a marginal rate, is the rate a taxpayer pays on her next dollar of income. Two, the average, or effective, tax rate comes from dividing the taxpayer's total tax by her total income. A tax system can be progressive, flat, or regressive. A progressive tax is one in which the rich pay a higher average rate than the not rich. A flat, or proportionate, tax is one in which everyone pays the same average rate. A regressive tax is one in which the rich pay a lower average rate than the not-rich. The current inconsistent income tax features progressive marginal rates. It is thus intended to be a progressive tax. The actual pattern of a tax system's progressivity depends on what sort of loopholes and gaps the tax has and on who can take advantage of them.

Keywords:   flat-tax plans, regressive tax, progressive tax, marginal rates, America

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