Could a flat tax system reshape America’s economy?

Then-Republican Presidential candidate, former U.S. President Donald Trump speaks to attendees during a campaign rally at the Johnny Mercer Theatre on Sept. 24, in Savannah, Georgia. Brandon Bell/Getty

With Republicans set to control the White House, Senate and House of Representatives in January, discussions about tax reform are gaining momentum, including the possibility of implementing a flat tax system.

Donald Trump Jr. recently expressed support for a flat tax on social media platform X, sparking further debate.

A flat tax is a single percentage income tax rate applied to all taxpayers, regardless of income, and typically eliminates deductions and exemptions, according to Investopedia.

The United States operates under a progressive tax system with seven income brackets, where higher earners pay a higher percentage, up to 37%.

Critics argue that a flat tax is regressive, as it imposes a larger financial burden on lower-income individuals while higher-income taxpayers find it easier to bear the cost, Investopedia reported.

However, proponents, including the Tax Foundation, a center-right nonprofit, suggest that a flat tax could boost wages by 1.4%, add 1.3 million jobs and reduce compliance costs by at least $100 billion annually. The group also claims that simplifying the tax system could maintain or exceed current federal funding levels.

Britannica reports a flat tax could lead to budget shortfalls because of reduced taxes for the wealthy. Supporters counter that economic growth from a flat tax could offset revenue losses.

President-elect Donald Trump will work with Congress to enact any tax system changes, a process potentially eased by Republican majorities in both chambers.

Thirteen U.S. states currently have a flat income tax, with rates ranging from 2% to nearly 5%, according to the Tax Foundation. Only four states have enshrined this status in their constitutions. Proponents argue that flat taxes make states more competitive in attracting businesses.

Internationally, several Eastern European countries adopted flat tax systems in the late 1990s. Russia, for instance, introduced a 13% flat tax in 2001, later increasing it to 15% for high earners. The Hoover Institution reported that this change increased tax compliance and revenue, with the contribution to the overall budget rising from 12.1% in 2000 to 17% by 2003.

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