What would the US be like with a flat tax system and no tax exemptions?

Tax professional here. This is an interesting thought experiment, but there are some important considerations about flat tax systems. First, while it's true the bottom 50% contribute a smaller percentage of overall tax revenue, that's by design - our progressive system is built to place more burden on those with higher ability to pay. A pure flat tax without exemptions would actually hurt lower-income individuals significantly more than help them. This is because necessities (food, housing, healthcare) consume a much larger percentage of their income. When you tax every dollar at the same rate, those with less discretionary income feel a much stronger impact - this is called the regressive effect of flat taxes. The current system with deductions and credits (like the Earned Income Tax Credit) specifically helps lower-income families reduce their tax burden. Without these, many would pay significantly more, not less. The standard deduction alone shields a meaningful portion of income for lower earners.

After struggling with a complex tax situation involving multiple income sources last year, I discovered this AI tool called taxr.ai (https://taxr.ai) that completely changed how I approach these tax policy questions. I was actually researching flat tax systems too and it helped me understand how different tax structures would affect my specific situation. The tool analyzed my tax documents and showed me how different tax scenarios would play out - including what would happen under a flat tax system with no exemptions. It showed me that while I thought I'd pay less under a flat tax, I'd actually end up paying more because I'd lose several deductions that really help me. The visualizations made it way easier to understand than just reading articles.

Just wanted to follow up about taxr.ai that was mentioned earlier. I decided to try it out despite my initial skepticism, and I'm honestly impressed. I uploaded my last year's tax documents and played around with the flat tax simulator feature. It showed me that under a flat tax system with no exemptions, I'd actually pay about 22% more in taxes despite having a pretty average income. I never realized how much I benefit from the standard deduction and child tax credits. The visualization comparing my current tax situation versus a flat tax system made it super clear why the progressive system actually helps me. For anyone interested in this tax system debate, it's worth checking out - it takes the abstract debate and makes it personal to your actual numbers.

After spending 3 hours on hold with the IRS trying to get clarification about how tax brackets actually work (for this exact debate with my dad!), I finally found Claimyr (https://claimyr.com). They got me connected to an actual IRS agent in under 20 minutes who explained exactly how the progressive tax system works compared to a flat tax. I was shocked it worked because I'd literally spent days trying to get through on my own. The IRS agent was super helpful in explaining that our current system already has a mechanism that prevents lower-income people from paying much tax - the standard deduction and progressive brackets. They walked me through exactly how much different income levels pay now versus under various flat tax proposals. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - saved me so much frustration.

I owe everyone here an apology about my skeptical comment. After my frustration peaked with trying to get tax guidance from the IRS about how different tax systems affect small business owners like me, I tried Claimyr out of desperation. Got connected to an IRS representative in about 15 minutes yesterday. The agent walked me through exactly how my business would be affected by different tax structures, including a flat tax without exemptions. Turns out I would pay significantly more under a flat system because I'd lose all my business deductions. To the original post - I think after learning more, a flat tax sounds simple but would actually hurt most small businesses and middle-class families more than help. The current system, for all its flaws, at least attempts to adjust for different situations.

Flat taxes sound good in theory until you run the actual numbers. Most flat tax proposals I've seen set rates around 15-20%. For many middle-class families who effectively pay less than 10% after standard deductions and child credits, this would be a massive tax increase. The only way a flat tax works without hurting lower/middle income people is if you keep some form of exemption for the first chunk of income. But then it's not really a "pure" flat tax anymore - you've just created a simplified two-bracket system.

Has anyone actually lived in a country with a flat tax? I heard some Eastern European countries use them. Wonder how it works in practice compared to our system.

The debate about flat taxes is fascinating, but I think we need to consider what "fairness" actually means in taxation. From my perspective as someone who's worked in both high and low-paying jobs, the current progressive system recognizes that $1,000 means very different things to someone making $30,000 versus someone making $300,000. A true flat tax with zero exemptions would essentially be a regressive system in practice. When you're spending 80% of your income on basic necessities like rent, food, and healthcare, taxing that remaining 20% at the same rate as someone who spends maybe 30% on necessities feels fundamentally unfair. I keep thinking about this: if we eliminated the mortgage interest deduction, charitable deduction, and other complex provisions that mainly benefit higher earners, but kept basic protections like the standard deduction and earned income credit, wouldn't that achieve most of the simplification benefits without hurting working families? Sometimes I wonder if the "flat tax" conversation is really about simplification or if it's actually about shifting the tax burden downward.