Assume That the Present Tax System and Its Progressive Rate

question 38

True/False

Assume that the present tax system and its progressive rate structure are replaced by a so-called flat tax method.Under this system, a single rate would be applied to any type of income regardless of source, and large exemptions would be allowed to each taxpayer to eliminate low-income taxpayers from the tax rolls.One favorable result of such a system is to completely eliminate the motivation for arrangements when the sole purpose is to split or shift income to lower bracket taxpayers.

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