Senator Introduces 17% Flat Tax Bill To Reduce Tax Returns 'To The Size Of A Pos

Started by Turks, January 30, 2013, 06:52:59 AM

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Turks

Sen. Richard Shelby (R-AL) today introduced a bill to replace the tax code with a 17% flat tax that would reduce tax returns to "the size of a postcard."

Shelby's Simplified, Manageable And Responsible Tax (SMART) Act establishes a flat tax rate of 17 percent on all income (personal and business).

It also repeals estate taxes, gift taxes, and the Alternative Minimum Tax (ATM).

The only exemptions would be personal exemptions of:

$14,070 for a single person;
$17,970 for a head of household;
$28,140 for a married couple filing jointly; and
$6,070 for each dependent


http://cnsnews.com/blog/craig-bannister/senator-introduces-17-flat-tax-bill-reduce-tax-returns-size-postcard

The Stranger

Please don't get me wrong this sounds great and I know I have paid my fair share of income taxes over the years. Wouldn't this put a hurting on the elderly?
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kramarat

Quote from: The Stranger on January 30, 2013, 07:00:29 AM
Please don't get me wrong this sounds great and I know I have paid my fair share of income taxes over the years. Wouldn't this put a hurting on the elderly?

It doesn't include income on savings, and I'm guessing that SS wouldn't be considered to be income.

Of course, nothing will help if we don't shrink the amount of money that government is sucking out of the economy.

mhughes

Not being able to deduct business expenses would kill most small businesses.  Heck, it would kill most big business.

The Stranger

Quote from: kramarat on January 30, 2013, 07:08:30 AM


Of course, nothing will help if we don't shrink the amount of money that government is sucking out of the economy.
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kramarat

Quote from: mhughes on January 30, 2013, 07:08:50 AM
Not being able to deduct business expenses would kill most small businesses.  Heck, it would kill most big business.

Wouldn't the 17% only be applied to profit?

Solar

Quote from: kramarat on January 30, 2013, 07:30:52 AM
Wouldn't the 17% only be applied to profit?
Exactly! Now just assume for a moment a business needs a write off, what would be a simple way to write off profit?
New hires, imagine that, instant demand for workers across the country.
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kramarat

Quote from: Solar on January 30, 2013, 07:34:02 AM
Exactly! Now just assume for a moment a business needs a write off, what would be a simple way to write off profit?
New hires, imagine that, instant demand for workers across the country.

Well, labor expenses are already a write off. I think something like this would just simplify the tax code. Businesses would still be required to keep stringent records, but rather than the pain in the ass of doing itemized deductions, they would just pay a flat 17% on total profit, after expenses. I'm sure they would still be subject to IRS audits, to keep them straight.

mhughes

QuoteWouldn't the 17% only be applied to profit?

Right now, most businesses are taxed on income, and they get to write off all their expenses which has the net effect of profits being taxed.

The article stated there were only personal exceptions, and listed them.  I made the foolish mistake of trusting a news source.  I went and read the actual bill.  It maintains the business expense deductions.  Just a poorly written article.

Also fyi, it looks like it includes social security income.

Look at this piece too:

Quote
TITLE II—SUPERMAJORITY
15 REQUIRED FOR TAX CHANGES
16 SEC. 201. SUPERMAJORITY REQUIRED.
17 (a) IN GENERAL.—It shall not be in order in the
18 House of Representatives or the Senate to consider any
19 bill, joint resolution, amendment thereto, or conference re-
20 port thereon that includes any provision that—
21 (1) increases any Federal income tax rate,
22 (2) creates any additional Federal income tax
23 rate,
24 (3) reduces the standard deduction, or 22
OTT13023 S.L.C.
1 (4) provides any exclusion, deduction, credit, or
2 other benefit which results in a reduction in Federal
3 revenues.
4 (b) WAIVER OR SUSPENSION.—This section may be
5 waived or suspended in the House of Representatives or
6 the Senate only by the affirmative vote of three-fifths of
7 the Members, duly chosen and sworn

It sounds nice, but I don't think that would hold any legal weight.  Congress can always pass a law with a simple majority that says "nevermind" to that clause.

mdgiles

What about deductions? Deductions are the personal equivalent of business expenses. Just as a business gets to write off the expenses involved in making a taxable profit; individual should be able to write off those expenses involved in making taxable income. Either that or increase the exemption so that it realistically represents the expense of day to day living.
"LIBERALS: their willful ignorance is rivaled only by their catastrophic stupidity"!

mhughes

Quote from: mdgiles on January 30, 2013, 08:13:31 AM
What about deductions? Deductions are the personal equivalent of business expenses. Just as a business gets to write off the expenses involved in making a taxable profit; individual should be able to write off those expenses involved in making taxable income. Either that or increase the exemption so that it realistically represents the expense of day to day living.

Nope, no more deductions under this plan.  The idea is a lower rate and only a standard deduction.

Taxes that screw people in new and exciting ways :)

Property prices will probably go down without the mortgage credit.

mdgiles

Quote from: mhughes on January 30, 2013, 08:47:38 AM
Nope, no more deductions under this plan.  The idea is a lower rate and only a standard deduction.

Taxes that screw people in new and exciting ways :)

Property prices will probably go down without the mortgage credit.
Except, of course, that with deductions, almost no one pays the higher rate. IOW, it's really a tax hike - or weren't we supposed to notice? The lowlifes in DC have been playing that game now for quite awhile; keeping the rate the same or even slightly lowering it, while cutting deductions so everyone ends up paying more and more.
"LIBERALS: their willful ignorance is rivaled only by their catastrophic stupidity"!

Chief Brett

I paid an effective tax rate of 32% last year.  I wholeheartedly support a flat tax, 17% sounds good to me.  Screw deductions, managing tax laws, and working your returns.  Take the 17% out of my paycheck and me and the IRS will be done with it.  LETS GET THIS DONE!

mdgiles

Quote from: Chief Brett on January 30, 2013, 11:16:02 AM
I paid an effective tax rate of 32% last year.  I wholeheartedly support a flat tax, 17% sounds good to me.  Screw deductions, managing tax laws, and working your returns.  Take the 17% out of my paycheck and me and the IRS will be done with it.  LETS GET THIS DONE!
You said an effective rate, so I'm assuming that was on your taxable income after you took ever deduction the law allowed. What would your taxable income have been absent any deductions. If you live in the Northeast, the big one is the deduction for state and local taxes.
"LIBERALS: their willful ignorance is rivaled only by their catastrophic stupidity"!

raptor5618

I think that the number probably is based so that it is similar to what people are already paying but at a savings of all the effort accumulating information for deductions an preparing tax forms.  If you make twice your standard deduction your effective rate is only 8.5 percent.  So I think that essentially no one would actually pay the full 17% of their income.   

As far as businesses go,  taxes are the least effective means of collecting tax.  Check some of the economic sites and you will find info that is the basis for this statement.  What it essentially is saying is that the tax only has an impact on how competitive a business can be.  The reality is that all corporate taxes are paid by the consumer of that businesses products.  That is why politicians are so happy to toss a tax at corporations, health providers and medical device manufacturers.   It is a tax on you and me thanks to our government, yet except for those who understand accounting and finance blame the rising cost on greedy businessmen.  It is one of the easiest way to hid a tax on us all.  Oh and yes it is not progressive.   

Of course the libs will scream about how big business and executives make too much.  Well if that is true then they are free to compete with these greedy bastards and by paying themselves what they think is right and making less profits they will surely swallow the market share of the greedy corporation.  Of course the do not see it that way and prefer gnash their teeth and moan about greed and avarice.   

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