Quote Originally Posted by Wraith View Post
A prebate does in fact make a flat tax progressive. A progressive tax is one in which the percentage of your income paid as tax rises with your income. With a prebate, the effective tax would approach, but never quite reach, whatever the flat tax rate is. The upwards approach would happen relative to the rise in income. Thus, progressive.
The progression is really non-linear and strong in the low part, weak in the hight. I made a graph to show you what I mean:

This graph shows a flat income tax (10%) with 3000 prebate. Y is the % of the tax you pay, X is your income. As you see, you have a huge progression under 200000 and than the curve get's almost flat.

But this is still an income tax. If you now go to a VAT like tax, you would have a different curve because not everyone spends as much money on goods and services.