A flat tax rate refers to a tax policy that includes a single tax rate for all citizens. This proportional system stands in contrast to the current progressive tax rate that the United States federal government uses. Under a progressive tax system, higher portions of an individual’s earnings are taxed at higher rates.
The flat tax policy is divisive across political lines, as polling indicates that flat-rate taxation is a popular concept among Republicans; 59% of Republicans would support a flat-rate tax versus just 25% of Democrats.
The Democratic Stance on a Flat Tax Rate
The Democratic Party’s political stance opposes a flat tax rate. During the 2024 presidential election, the Democratic nominee for president, Vice President Harris, pledged not to raise taxes on anyone earning under $400,000, but that she would raise taxes on higher earners. The Democratic Party Platform tells us that the democratic stance on tax policy advocates for a progressive tax system which focuses on increasing the tax burden on high-income individuals and corporations while providing tax relief and credits for lower and middle-income families.
This stance is visible at the state level. For example, Democratic legislators in Ohio pushed back against a Republican-led bill that would implement a flat income tax of 2.75%. The democratic legislators argued that property tax cuts would be more beneficial to constituents, and that the decrease in tax revenues would harm public services like the Public Library Fund.
Additionally, of the 14 states that have a flat tax rate, only two, Colorado and Illinois, are Democratic-leaning. In both cases, the flat tax rates are embedded in their constitutions, making it difficult to reverse.
The main criticisms of a flat tax rate are its unfairness and potential to reduce government revenue. Critics argue that a flat tax rate would have a regressive impact, as lower and middle-income families spend a higher percentage of their income on essential needs. Therefore, a flat tax rate consumes a proportionally large share of their disposable income compared to high-income families. Furthermore, because a flat tax rate results in significant tax cuts for high-income earners, there will be a reduction in government revenue, which could cut government-funded services and programs.
The Republican Stance on a Flat Tax Rate
The Republican Party’s political stance is supportive of a flat tax rate. This support has been voiced by prominent politicians for years. During the 2016 Republican presidential primary, several candidates spoke of their plans to simplify tax policy. Ted Cruz called for a flat 10%, while Ben Carson, Mike Huckabee, and Rand Paul had other flat tax rate proposals. Other candidates, Jeb Bush, Marco Rubio, and Donald Trump, advocated for plans that would reduce the number of tax brackets.
At the state level, 12 of 14 states that have implemented a flat tax rate are Republican-led. Therefore, the state flat tax movement is predominantly pushed by Republicans.
Support for a flat tax rate is typically based on three main arguments. The first is that a single rate could simplify the tax code and make it easier for taxpayers to understand their obligations without having to navigate brackets and directions. A second major argument is the economic benefits. Proponents believe that removing the highest tax bracket could motivate high earners to work, save, and invest more, which would stimulate economic growth. Finally, a flat tax rate could be more ethical as it would remove tax exemptions and ensure that everyone contributes proportionally to the system.
A Brief History of Flat Tax Rate Policy
The first proposal for a national flat-tax rate in the U.S. was introduced in 1981 by economists Alvin Rabushka and Robert Hall. They intended to simplify U.S. tax policies by replacing the progressive federal income tax. The flat-tax proposal influenced President Ronald Reagan’s Tax Reform Act of 1986. While not a pure flat tax, this act simplified the tax system by collapsing multiple tax brackets with just two rates: 15% and 28%.
However, this flatter system was short-lived. In 1990, Congress added a third rate of 31% on higher incomes. A few years later, President Clinton added additional tax brackets, moving further away from a flat tax rate. The flat tax was proposed again in 1995, but it failed to reach the House or Senate floors. Currently, the U.S. federal system remains progressive, with seven tax brackets.
While a federal flat tax rate has not been enacted, an increasing number of states have adopted flat tax rates. The first state to implement a flat tax was Massachusetts in 1917, though it transitioned to a progressive tax rate in 2023. During the 1900s, only a handful of states had implemented a flat tax rate, but the pace of adoption has accelerated since. Starting in 2007, nine states, most of them Republican-leaning, transitioned to a flat tax system.
Public Opinion on a Flat Tax Rate
Public flat income tax debate varies, but most polls suggest that a majority of Americans prefer the current progressive system. Polling in 2015 from YouGov found that 39% of Americans supported a flat tax rate, 30% opposed it, and 31% were unsure. The same research indicated that half of Americans considered the current progressive tax system as fair, and only 29% believed it was unfair.
Additional polling data showed that the majority of Americans across party lines support a tax system where the wealthiest contribute more to help those in need. Close to two-thirds of voters favor Congress repealing the significant tax cuts for the wealthy that were enacted in 2017. Moreover, 80% of Americans support increased investments in national initiatives like caregiving, funded by raising taxes on the wealthiest individuals and corporations.
What the Future Holds
At a federal level, the opposing policy stance on flat tax rate remains unlikely to change since there is a large partisan divide, and the general public supports a progressive tax structure. However, a growing number of states are actively transitioning to a flat tax rate system to stimulate the economy and simplify their tax codes.
Flat income tax debate could lead to a compromise of a flatter tax system, similar to the 1986 Tax Reform Act. This could offer the Republican goal of tax simplification while retaining part of a progressive tax system favored by Democrats. However, the future of a flat tax rate is unknown.
To compare political parties’ views on other key policy topics, visit Biasly’s full list of Political Party Policy Stances.
To unlock more data-driven insights into media bias, explore political leanings with research-backed tools, and customize your news feed around what matters most to you, sign up for a Biasly Premium News Membership.