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Taxes
I support a flat tax, as opposed to a national sales tax, because I believe that the flat tax encourages savings in a more effective manner without leaving the federal budget vulnerable to fluctuations in our economy. Under a flat tax, government revenues would not fluctuate as severely because of changes in the economy as they would with a national sales tax. This is the same problem that many state budgets are facing today because they depend too much on sales taxes.
Additionally, a flat tax better protects poor and low-income Americans because they are not forced to overpay taxes through their daily purchases, and then wait until the end of the month for a rebate check, as many national sales tax plans have proposed. These Americans need this money immediately to pay their bills and meet their needs. Under my proposal, the "Tax Simplification Act," low-income Americans would not have to pay for these distortions in the first place because of a personal deduction that would apply to all Americans.
As drafted, my proposed flat tax, S.1099, the "Tax Simplification Act," would replace our current incomprehensible tax code with a flat rate of 17 percent on all wages, salaries, and pensions. The only exemptions would be as follows: a personal exemption of $12,790 for a single person, $16,330 for a head of household, $25,580 for a married couple filing jointly and $5,510 for each dependent. These allowances would be indexed to inflation.
To prevent the double-taxation of income, earnings from savings would not be included as taxable income. This would result in a tax cut for virtually all taxpayers. Businesses would pay the same 17 percent rate on the difference (if positive) between revenue and expenses. The rate of taxation would be 19 percent in the first two years of the flat tax and then lowered to the desired rate of 17 percent in the third year.
I believe that the flat tax would revolutionize the way our government operates. Were a flat tax in place now, taxpayers would file a return the size of a postcard. Rather than spending hours poring over convoluted IRS forms, or resorting to professional tax assistance, the flat tax allows taxpayers to determine their taxes quickly and easily.
The flat tax would decrease the cost of compliance to the government and would represent a massive reduction in the tax burden carried by hardworking Americans. I intend to continue to work with my colleagues to enact my flat tax proposal and provide these much-needed benefits to the American taxpayer.
Click here to read Senator Shelby's newsletter about the Flat Tax.
Click here to read Senator Shelby's newsletter about tax issues in the 109th Congress.
Click here to read Senator Shelby's newsletter about tax issues in the 108th Congress.
Congressional Research Service Issues Briefs
The Congressional Research Service (CRS) is part of the legislative branch of the federal government. CRS, which is a department of the Library of Congress, works exclusively as a nonpartisan analytical, research, and reference arm for Congress.
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For more information on this issue, please view the following CRS reports:
Flat Tax Proposals and Fundamental Tax Reform: An Overview
Major Tax Issues in the 109th Congress.
More information on Senator Shelby's activities regarding tax issues:
| Date | Title |
|---|---|
| 09/15/05 | SHELBY SUPPORTS TAX RELIEF FOR HURRICANE KATRINA VICTIMS |
| 05/24/05 | SHELBY INTRODUCES FLAT TAX LEGISLATION |
| 09/29/04 | SHELBY SPEECH AT LAFFER CONFERENCE |
Chemical Weapons Disposal at Anniston
Department of Homeland Security
Disability and Military Retirement Benefits