nt” (Armey, Shelby).Because of the high tax overpayment, there is room to provide tax relief. The flat tax would provide significant tax relief. When the rate is reduced to 17 percent in the third year, there would be significant further tax reduction. The bill was carefully designed to safeguard taxpayers against a return to budget deficits; however, rigid spending caps are included in the plan. Coupled with the additional economic growth the flat tax will spur, the tight spending controls will ensure that the budget reaches balance by 2002.The flat tax eliminates the marriage penalty and almost doubles the deduction for dependent children. By ending the multiple taxation of saving, the flat tax provides all Americans with the tax equivalent of an unlimited IRA. This will make it easier for families to save for more important things in their life like a home, vacation, college education for themselves or for their children or retirement. The flat tax is also pro-growth. Today, business earnings are double tax through the corporate income tax and then the tax dividends, which are after-tax payments. This double taxation of the same direction of income makes saving and investing much less attractive relative to consumption. As any businessman or economist knows, savings provide the dollars for investment in the technologies that make workers more efficient. Without investment, workers cannot enhance their productivity and their wages stagnate. Today's double taxation of income discourages saving, reduces the pool of investment dollars available to entrepreneurs and workers, slows productivity and wage growth, and lowers living standards. Because the flat tax removes the bias against work, saving, and investment, it would lead to an investment boom and higher wages. By lowering the top marginal income-tax rate from 40 percent to 17 percent, the flat tax would encourage more work, entrepreneurial effort, and risk taking. And by en...
