Should Individuals and Businesses Have the Choice of a Flat Tax Instead of the Current Tax System? (H.R. 1040)
Do you support or oppose this bill?
What is H.R. 1040?
(Updated July 15, 2021)
This bill would give individuals and businesses the choice to irrevocably opt out of the current income tax structure and instead pay a flat tax of 19 percent for the first two years, and 17 percent annually thereafter. To increase the rate of the flat tax or reduce the value of deductions, a two-thirds vote by both chambers of Congress would be required. Additionally, this bill would repeal the estate, gift, and generation-skipping transfer taxes.
The tax would be calculated by subtracting from gross income a basic standard deduction for the filing individual and additional standard deduction(s) for their dependants. For businesses it would be a similar process, with deductions for business inputs, wages, and retirement contributions taken into account.
Argument in favor
An optional flat tax would dramatically simplify the tax code for Americans who choose to take advantage of it, saving them both time and money.
Argument opposed
Creating an optional flat tax alongside the existing tax code would let the wealthiest Americans pay less in taxes than they currently do, it’s unfair.
Impact
Individuals and businesses that would prefer a flat tax; Congress; and the federal government.
Cost of H.R. 1040
A CBO cost estimate is unavailable.
Additional Info
In-Depth: Sponsoring Rep. Michael Burgess (R-TX) is a longtime advocate for a flat tax, and has introduced this legislation during previous sessions of Congress. Upon introducing one of this bill’s predecessors in 2011, Burgess said:
“The goal of the Freedom Flat Tax is to create a tax system that minimizes the number of market-distorting investment decisions that are made as a result of the current tax system. People should base their financial systems on common-sense economics, not the tax code. HR 1040 is simple, fair and pro-growth.”
This legislation currently has the support of one cosponsor in the House, Rep. Blake Farenthold (R-TX).
Media:
Summary by Eric Revell
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