Which type of tax has a fixed rate regardless of the taxpayer's income level?

A tax that has a fixed rate regardless of the taxpayer's income level is termed as a proportional tax, often known as a flat tax. In this tax structure, every taxpayer pays the same percentage of their income, which means the rate remains constant no matter how much income is earned. This contrasts with other tax types where the rate may vary according to income levels.

In a progressive tax system, the tax rate increases as the income level increases, meaning higher earners pay a higher percentage of their income in taxes. This design aims to reduce income inequality by imposing a greater tax burden on those who have the ability to pay more.

On the other hand, a regressive tax imposes a larger burden on lower-income individuals by taking a larger percentage of their income compared to higher-income individuals. Sales taxes and some types of excise taxes are often cited as examples of regressive taxes.

A flat tax is similar to a proportional tax, as it also maintains a single tax rate. The terms can sometimes be used interchangeably in everyday contexts. However, understanding the concept of a proportional tax helps clarify how it applies across different income levels, emphasizing its consistent rate regardless of financial status.