ding the destructive policy of double taxing savings, and by sweeping away all double taxation the estate tax, the capital gains tax, and the tax on dividends saving would increase and the capital funds would surge.“Lower Interest Rates. According to a study by an economist at the Federal Reserve Bank of Kansas City, published in the Kansas City Federal Reserve's Economic Review, the flat tax would reduce interest rates by 25 percent, or about two percentage points. Interest rates under the flat tax will not only reduce the costs of student, car and credit card loans; they will also offset the loss of the home mortgage interest deduction. According to reports by the Congressional Research Service and the Tax Foundation, the flat tax will have no meaningful effect on home values” (Armey, Shelby).Individual Wage Tax“Individuals pay 17 percent of all wages, salaries, and pensions, after subtracting allowances. In 2001, when fully phased in, the family allowances will be $12,200 for a single person, $24,400 for a married couple filing jointly and $5,500 for each dependent child. These allowances are indexed to inflation. The flat tax replaces the current income tax system, but does not affect the Social Security and Medicare payroll taxes. Social Security benefits would not be taxed” (Armey, Shelby).Business TaxAll business income, whatever the source may be corporate, partnership, sole proprietor, professional, farm, rental profits and royalties, is taxed at one low rate. If there is a positive difference between revenues and expenses businesses pay 17 percent of the difference. Collecting business income earned by individuals at the business allows for a simple, airtight system that ensures all income in the economy is taxed. “According to Joseph Stiglitz, President Clinton's former chairman of the Council of Economic Advisors, it is more efficient to collect business income at its source. He writes, "The u...
