Types of Proportional Taxes

by Leonardo Blair ; Updated July 27, 2017
A proportional tax is also called a flat tax.

A proportional tax, also called a flat tax is a system under which everyone pays the same rate for taxes regardless of income according to the Internal Revenue Service (IRS). "South-Western Federal Taxation 2010" cites most excise, general sales and employment taxes as types of proportional taxes.

Excise Taxes

An excise tax is paid when a particular product, such as gasoline, is purchased according to the IRS. The tax, as you may notice at the pump, is also usually included in the price of the product. While there are several types of excise taxes such as those levied on the use of highways by trucks and wagering, motor fuel forms a major part of the excise tax program.

General Sales

A general sales tax is an ad valorem tax paid on the price of goods or services according to the "BusinessDictionary" So if the sales tax in a city is 10 percent and the price of a certain brand of watches in a store is $100, everyone will have to pay $110 for that watch when the sales tax is added.

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Proportional Taxes and Income

A good example of a proportional employment tax is the Medicare tax. The IRS currently levies a flat or fixed Medicare tax–currently 2.9 percent of income–on the entire income of each individual. Employers are required to collect these taxes on behalf of the IRS while self employed individuals are required by law to make these payments from all reported income.

About the Author

Leonardo Blair has been writing professionally since 2001. He has covered topics such as politics, crime, international affairs, finance and general features for several publications including "The Gleaner," "Brooklyn Eagle," "Columbia Journalism Review" and the "New York Post." He holds a Master of Science in journalism from Columbia University.

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