On taxation
Our existing tax system is broken. It is unfair and too complex. We need a simpler, fairer, pro-growth tax system. My proposal is a so called flat tax. The idea is to a) increase revenue, b) increase growth and c) make our system fair for everyone. Here is my idea:
- Married Americans earning less than $50,000 pay no federal income tax.
- Single Americans earning less than $25,000 pay no federal income tax.
- Married Americans earning more than $50,000 pay 20% on all income over that amount.
- Single Americans earning more than $25,000 pay 20% on all income over that amount.
- Corporations (partnerships, sole proprietor, professional, farm and rental) simply pay 20% on income (difference between revenue and expenses). Alternatively, a corporation could choose to pay 8% on revenue (similar to the Russian system).
- All deductions are eliminated.
- Withholding would be eliminated, everyone pays taxes due on a quarterly basis.
- Federal government would be prevented from paying non-taxpayers through such programs as the ‘Earned Income Tax Credit’.
- 20% would be highest allowable tax rate; however, it is conceivable that the rate could be lowered to 17% (Armey/Forbes plan), 13% (Flat rate in Russia) or any other percentage of income lower than 20%.
This plan is VERY simple. Anyone can easily calculate their taxes due. There are no loopholes or special programs for the rich. Too many wealthy Americans spend their money, time and attention looking for ways to avoid paying taxes. Corporations locate offshore to avoid taxes. Why? Our system is designed to benefit the rich.
Countries all over Eastern Europe have implemented flat tax programs with great results. Dr. Daniel Mitchell explains, “Remember the saying: “To the victors go the spoils”? It must not be true. We won the Cold War, but Russia gets a flat tax while America is stuck with a Byzantine tax system based on class-warfare ideology.” Russia implemented a flat tax rate of 13% in 2001. Since then their economy has grown by more than 10% and their tax revenues have increased by more than 50%. Why? Dr. Mitchell explains, “Because people are willing to produce more and pay their taxes when the system if fair and tax rates are low — exactly what Ronald Reagan predicted when he triggered America’s economic boom with lower tax rates 20 years ago. Ironically, the former communists in Moscow now understand supply-side economics, yet liberals in Congress are still relying on the politics of hate-and-envy.”
Russia didn’t invent the idea of a flat tax. Hong Kong has been the worlds fastest growing economy for 50 years – their taxes have been flat for a very long time. The highlighted countries below have what are known as flat taxes:
