Subject: Flat tax
Comment: I propose that the federal income tax be converted to a flat rate.
- There should be no exemptions for anything.
- The same tax rate should apply to individuals, corporations, partnerships, and all other business organizations.
- For individuals, the tax should apply to earned income only. Savings, capital gains, and investment income should be tax free.
- For individuals, a certain amount of income, the same for all individuals, should be exempted from tax. The exemption level should be chosen to so that the resulting tax levels match the current progressive tax structure as closely as possible.
- The change to a flat tax should be phased in over several years to minimize disruption to the economy.
The above changes would have the following advantages over the present system:
- Increased revenues due to a higher level of compliance.
- Savings for taxpayers of several billion dollars a year in costs associated with filing taxes.
- Less distortion of our free-market economy due to tax avoidance concerns.
- Less cynicism among the citizenry when they see that everyone pays the same tax rate.