U.S. Senator Richard Shelby (R-Ala.) today introduced legislation (S. 820) to establish a flat tax on all income. Since his first election to the Senate in 1986, Senator Shelby has been an advocate of the flat tax, introducing similar legislation each congress. Senator Shelby made the following statement about the economic benefits of adopting a flat tax:
“Our tax code and regulations total tens of thousands of pages that are complicated and confusing. Americans want a simple, common-sense solution. That is why I have introduced the SMART Act - the Simplified, Manageable And Responsible Tax Act.
“Given today’s harsh economic conditions, the introduction of this bill is a necessary step towards regaining financial stability as a nation. The time has come to put an end to the headaches caused by our inefficient tax code; the SMART Act would do so in a manner that promotes job creation and prosperity in our country.”
The SMART Act establishes a flat income tax of 17 percent on all income. The only exemptions would be personal exemptions of:
• $13,410 for a single person;
• $17,120 for a head of household;
• $26,810 for a married couple filing jointly; and
• $5,780 for each dependent
These allowances would also be indexed to the consumer price index in order to prevent inflation from raising our tax burden. To prevent the double-taxation of income, earnings from savings would not be included as taxable income, resulting in an immediate tax cut for virtually all taxpayers.
With the SMART Act in place, taxpayers would file a return the size of a postcard. There would be no more long hours spent poring over convoluted IRS forms and no more fees paid for professional tax assistance.
Under the SMART Act, businesses would pay the same 17 percent rate on a positive difference between revenue and expenses, allowing businesses to redirect resources away from tax compliance and toward expansion and job creation.
By closing loopholes for individuals and businesses, the SMART Act would create broad-based lower tax rates that would give American individuals and businesses a competitive edge, create and retain jobs in the United States, and curb offshoring.