A proportional tax is a type of tax system that levies the same tax rate on everyone, regardless of their income level. This means that the tax rate remains fixed, with no change as the taxable base amount increases or decreases. The amount of tax paid is in proportion to the amount subject to taxation. Proportional taxes maintain equal tax incidence regardless of the ability-to-pay and do not shift the incidence disproportionately to those with a higher or lower economic well-being.

Proportional taxes can be applied to individual taxes or to a tax system as a whole. Examples of proportional taxes include per capita taxes, gross receipts taxes, and occupational taxes. The sales tax is also an example of a proportional tax because all consumers, regardless of income, pay the same fixed rate.

Proponents of proportional taxes believe that they stimulate the economy by encouraging people to work more because there is no tax penalty for earning more. They also believe that businesses are likely to spend and invest more under a flat tax system. However, critics argue that proportional tax systems place an unfair burden on low-wage earners in exchange for lowering tax rates on the wealthy.

In summary, a proportional tax is a tax system that requires the same percentage of income from all taxpayers, regardless of their income. It is intended to create greater equality between marginal tax rates and average tax rates paid.