If itemized deductions were required, the average cost to file was $273. The average cost to file a simple Form 1040 with no itemized deductions and a state tax return was $176 in 2017.
About 7 in 10 Americans worry about preparing their taxes, with the top concern being that a mistake could trigger an audit. It would reduce tax preparation costs.ĬBS News reports that 50% of tax filers pay a professional to prepare their taxes and file their return. With a flat tax system, there would only be one tax bracket.Ģ. That means they’d pay 10% on their first $9,325 of income, then 15% from that point up to $37,950, and so forth. Every household works their way up the tax bracket until their income level is reached. In the United States, there were 7 different tax brackets enforced for the 2017 tax year.
When there is a system of progressive taxation, tax filers must have access to the current income brackets to accurately file their taxes. Here are the essential flat tax pros and cons to examine. Only earned income is taxed, which would theoretically encourage economic growth.Īs with any system of taxation, there are several advantages and disadvantages which must be considered. That simplifies the tax code because it eliminates deductions, exemptions, and credits. Instead of using a progressive system of taxation, where higher income earners pay a greater percentage of tax at new income levels, a flat tax system guarantees a specific rate. At the time of writing, there are currently flat tax systems in place in 8 U.S. A flat tax is a system of taxation that would require every household to pay the same tax rate on their income, regardless of how much income they made during the year.
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