How the Flat Tax Would Work
The flat tax rule simply says this: Everyone -- you, me, even Bill Gates -- would pay 17% of what's left of their total annual income from all wages, salaries, and pensions after subtracting a personal allowance. Uh, oh, "allowances". Here comes the higher math. Here come the forms. Right? Nope. There would be only four allowances:
- $23,200 for married filling jointly
- $14,850 for single head of household
- $11,600 for single
- $5,300 for each dependent child
No more, tax credits to figure, deductions to keep up with, or loopholes to look for. In fact, the entire tax return form would be printed -- on a postcard.
(source: U.S. Rep. Dick Armey's flat tax summary web site.)
Flat Tax Effect on Individuals
The more you earn (no matter how you earn it), the more you pay. Rep. Armey cites these examples: Given the exemptions shown above, a family of four earning $25,000 would owe no tax. A family of four earning $50,000 would owe 6%, and a family of four earning $200,000 would owe14% in tax.
The flat tax proposal would eliminate the marriage penalty, almost double the deduction for dependent children, and end multiple taxation of savings.
Social Security and Medicare payroll taxes would not be affected under the flat tax proposal. Social Security benefits would not be taxed.
How Would Businesses be Taxed?
Pretty much the same. All businesses, from "Mom N' Pops Widgets" to Microsoft would take their total income, subtract total expenses and if the result is a positive amount (profit), pay tax on that amount at a rate of 17%. Expenses would include purchases of goods and services, capital equipment, structures, land, wages and contributions to retirement plans.
How about NO ALLOWANCES? The employer would take out the 17%, send it to the government and nobody would have to file tax returns at all on April 15th.
ReplyDeleteThis way would be much fairer. Those people who chose not to have children would not be punished for their choices. You have children, you pay for them yourself with what money you have left after you pay in your 17%.
Everyone treated the same, no deductions, no allowances, no excuses. Your child works, they pay 17%.
This is the way to tax everyone fairly and if the government wants to tax pension & social security taxes, then they should deduct them straight out of the pension & social security checks before they send them out.