The Contract From America—Agenda Item 4
The fourth item in the “Contract From America” (including the level of support it received in a voting process) is:
4. Enact Fundamental Tax Reform
Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words—the length of the original Constitution. (64.90%)
This idea—a flat tax—would replace progressive taxation, in which tax rates rise for people with higher incomes. Should taxpayers fund the government equally? Or should tax policy redistribute wealth?
A flat tax would lift many burdens of filing taxes—the millions of hours that people spend at their kitchen tables filling out forms, the billions of dollars that people pay to tax preparers. It would reduce the need for thousands of bureaucrats in the Internal Revenue Service.
A flat tax would limit the social engineering that Congress tries to do through the tax system—pushing and pulling us with little penalties and credits in the tax code. And it would protect privacy, reducing the amount of information about their personal financial lives that people have to report to the government.
But according to a group called Citizens for Tax Justice, a flat tax would cut taxes for the rich and raise them for everyone else. It’s worth thinking about.
“Tax justice”—that’s an interesting idea. Some might argue that justice is getting to keep what you earn, but the group is clearly oriented toward preserving the progressive taxation system we’ve got.
A number of bills in the current Congress would establish a flat tax, among them:
H.R. 1040, The Freedom Flat Tax Act and S. 963, The Optional One Page Flat Tax Act
These bills would allow taxpayers to opt out of the current tax system and select a single-rate tax of 19% in the first two years and 17% after that. The tax would be charged on income above a standard deduction of $25,580 for joint filers, $16,330 for head of households, and $12,790 for individuals, plus $5,510 for each dependent. (All these numbers would be indexed for inflation.) It’s an irreversible choice—once you selected the flat tax, you couldn’t go back.
S. 741, The Flat Tax Act of 2009
This bill would create a single-rate tax of 20% after standard deductions of $25,000 for joint filers, $18,750 for heads of households, and $12,500 for individuals, plus $6,250 for each dependent. (Also indexed for inflation.) S. 741 would keep a few other deductions around, like the deduction for charitable contributions and home mortgages.
Here are the current votes on these bills. Click to vote, comment, learn more, and edit the wiki articles about these bills.