Dick Armey on Tax Reform Former Republican Representative (TX-26)

Flat tax of 17% for businesses too

I am convinced that the Flat Tax is in America’s future. Here is how it works. Rather than tinkering, we scrap the entire tax code, corporate and personal, and replace it with one flat rate that applies to all Americans. We leave just one exception, a generous family allowance to ensure that every family has the first claim to its own income sufficient to support itself. A typical family of four must earn $33,300 before it owes a cent of federal income tax. For earnings beyond that, everybody pays a flat 17% on all income above the allowance. No deductions. No loopholes. No tax breaks. No tables. No schedules. No nothing.

3/5 super-majority to raise tax rates

[Since last year’s Flat Tax proposal], we’ve added a new provision that requires a three-fifths super-majority to raise the rate, add additional rates, create loopholes, or shrink the family allowance. We are absolutely determined that the Flat Tax stay flat. Let me share some of the reasons why people like the Flat Tax.
1. It is incredibly simple. It would save the American people $232 billion a year in time and paperwork costs.
2. Unlike today’s tax code, the Flat Tax is honest. By sweeping away all the special-interest loopholes, it shows us right up front how much government is really costing us.
3. The Flat Tax will be a powerful engine of economic growth. The Flat Tax wipes out the perverse bias against savings [created by taxing savings interest, which will spur growth via more savings].
4. Perhaps most important, the Flat Tax is fair. When you tax everyone at the same rate, the rich pay a lot more in taxes than the middle class or the poor.

Eliminate charitable deduction

Tax unearned income at same rate as regular income

Flat tax of 17% with family allowance of $33,000

Imagine the new world that will dawn. Gone will be today’s 480 different tax forms and the 280 forms that explain how to fill out the 480 forms. Whole armies of tax attorneys and lobbyists will be out looking for productive work. As for all those IRS agents and auditors, instead of harassing you, they will be sitting silently at their desks like the Maytag repairman.

Replace home mortgage deduction with bigger standard ded.

Frankly, homeowners are not as wedded to this supposedly sacred cow of the interest deduction as you might think. By a 3-to-1 margin in a recent poll, homeowners said they are willing to forego the mortgage deduction if that loss is offset by a reduction in their tax bill by a similar amount, and that’s what this plan does.

Voted YES on $99 B economic stimulus: capital gains & income tax cuts.

The bill would allow more individuals to receive immediate $300 refunds, and lower the capital gains tax rate from 20% to 18%.

Voted YES on Tax cut package of $958 B over 10 years.

Voted YES on eliminating the Estate Tax ("death tax").

Voted YES on eliminating the "marriage penalty".

Voted YES on $46 billion in tax cuts for small business.

Reduce the capital gains tax .

Amend the Internal Revenue Code of 1986 to provide maximum rates of tax on capital gains of 15 percent for individuals and 28 percent for corporations and to index the basis of assets of individuals for purposes of determining gains and losses.

Phaseout the death tax.

Title: To amend the Internal Revenue Code of 1986 to phaseout the estate and gift taxes over a 10-year period.

Summary: Repeals, effective January 1, 2011, current provisions relating to the basis of property acquired from a decedent. Provides with respect to property acquired from a decedent dying on January 1, 2011, or later that:
1. property shall be treated as transferred by gift; and

2. the basis of the person acquiring the property shall be the lesser of the adjusted basis of the decedent or the fair market value of the property at the date of the decedent's death.

3. Requires specified information to be reported concerning non-cash assets over $1.3 million transferred at death and certain gifts exceeding $25,000.

4. Makes the exclusion of gain on the sale of a principal residence available to heirs.

5. Revises current provisions concerning the transfer of farm real to provide that gain on such exchange shall be recognized to the estate only to the extent that the fair market value of such property exceeds such value on the date of death.

6. Provides a similar rule for certain trusts.

7. Amends the special rules for allocation of the generation-skipping tax (GST) exemption to provide that if any individual makes an indirect skip during such individual's lifetime, any unused portion of such individual's GST exemption shall be allocated to the property transferred to the extent necessary to make the inclusion ratio for such property zero; and

8. if the amount of the indirect skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred.

9. Provides that, if an allocation of the GST exemption to any transfers of property is deemed to have been made at the close of an estate tax inclusion period, the value of the property shall be its value at such time.

Co-chair of the Congressional Flat Tax Caucus.

"Our current income tax system is broken. It is complex; unfair; inhibits saving, investment and job creation; imposes a heavy burden on families; and undermines the integrity of the Democratic process. It cannot be repaired by any tinkering or fine-tuning. It must be completely repealed and replaced."

THE FLAT TAX:
• It is SIMPLER--the flat tax will save taxpayers time and money
• It is FAIRER--The flat tax will treat everyone the same
• It is PRO-GROWTH--the flat tax will stimulate economic growth

Adopt a single-rate tax system.

The Contract from America, clause 4. Enact Fundamental Tax Reform:

Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words--the length of the original Constitution.

Repeal tax hikes in capital gains and death taxes.

The Contract from America, clause 10. Stop the Tax Hikes:

Permanently repeal all tax hikes, including those to the income, capital gains, and death taxes, currently scheduled to begin in 2011.

Repeal marriage tax; cut middle class taxes.

[As part of the Contract with America, within 100 days we pledge to bring to the House Floor the following bill]:

The American Dream Restoration Act:
A $500-per-child tax credit, begin repeal of the marriage tax penalty, and creation of American Dream Savings Accounts to provide middle-class tax relief.