Summary of the Flat Tax
The Armey-Shelby flat tax plan, the Freedom and Fairness Restoration Act, scraps the entire tax code and replaces it with a flat-rate income tax that treats every taxpayer the same. The plan would simplify the tax code, promote job and income growth, and restore fairness and integrity to the tax system.
Individuals and business would pay the same tax rate. The
Armey-Shelby plan eliminates all deductions and credits. The only income not subject to tax would be a generous personal exemption that every American would receive. For a family of four, the first $33,800 of income would be exempt from tax.
There are no breaks for special interests or loopholes for powerful lobbies. Just a simple tax system that treats every American the same.
The flat tax is simple. After seven decades of amendments, revisions, exceptions, loopholes, extenders and the occasional overhaul, today's code is a wasteful, complicated mess.
The flat tax would replace 480 tax forms -- and the 280 forms that explain how to fill out the 480 forms -- with just two postcard-size forms, one for individual wages and one for business income. According to the Tax Foundation, the flat tax would reduce compliance costs by 94 percent, freeing up resources that are currently wasted on record keeping, filing forms, learning the tax code, litigation, tax avoidance, etc.
The flat tax is pro-growth. Because the flat tax treats all economic activity equally, it will promote greater economic efficiency and increased prosperity. When saving is no longer taxed twice, people will save and invest more, leading to higher productivity and greater take-home pay. When marginal tax rates are lower, people will work more, start more businesses and devote fewer resources to tax avoidance and evasion. And because tax rules will be uniform, people will base their financial decisions on common-sense economics, not arcane tax law.
The flat tax is fair. The flat tax will restore fairness to the tax law by treating everyone the same. No matter how much money you make, what kind of business you're in, whether or not you have a lobbyist in Washington, you will be taxed at the same rate as every other taxpayer.
No longer would politicians decide who is more or less deserving of a tax break. No tax breaks or special loopholes. No schedules. No special deductions or credits. No social engineering or economic tinkering. Just a fair and simple system that treats everyone the same.
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