day's complex system could be replaced by two simple, postcard-size forms, one for business and one for individuals. 2. Tax all income at one rate, applying the law equally to all taxpayers. Everyone faces the same 17 percent rate, and the government would not punish or subsidize taxpayers on the basis of how they earn or spend income. 3. Tax all income just once, ending the bias against savings and investment. Capital income would be taxed on the business form to ensure compliance, and labor income would be taxed on the individual form” (Beach, Mitchell). The Armey-Shelby flat tax proposition follows each of these principles. For individuals, only the income from wages, salaries, and pensions are taxed, then generous personal and dependent exemptions are deducted. What is left after these deductions is taxed at 17 percent (after being taxed 20 percent for the first two years). For businesses, taxes are paid on income from the sale of goods or services. The business first adds up all of its income and then subtracts all of their expenses. The income that is left after these subtractions is taxed at 17 percent.What a Flat Tax Means for America“After seven decades of amendments, revisions, exceptions, loopholes, extenders, and the occasional overhaul, the current U.S. tax code is a monument to complexity. Working Americans currently spend 5.4 billion man hours learning the tax laws, finding the right forms, gathering their receipts and canceled checks, completing their returns, and dealing with IRS problems. That's more time than is spent producing every car, truck, and van manufactured in the United States. By one estimate, the needless time and paperwork costs our economy a staggering $200 billion a year”(Armey).“The current tax code isn't just confusing to the average American, it's even confusing to professional tax preparers. Last November, Money magazine asked 45 tax professionals to prepare a return for a...
