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From The Encyclopedia of Taxation and Tax Policy
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The flat tax is a proposal for fundamental tax reform that would replace the income tax system with a consumption tax, to be collected by levying a flat-rate tax on businesses and individuals. This article begins by explaining the Hall-Rabushka flat tax. It then discusses how to evaluate the effects of adopting the tax, its implications for economic efficiency and growth, and the transition process from an income to a flat tax.