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Alexander Proposes Optional 17 Percent Flat Tax, Single-Page Form
Urges Congress to Stop Largest Tax Hike in History to Protect Family Budgets
April 14, 2008 - WASHINGTON – Senator Lamar Alexander (R-Tenn.), chairman of the Senate Republican Conference, today spoke about the April 15 federal tax filing deadline and outlined a plan to create an optional 17 percent federal flat tax with a single-page form. Americans would have the option of choosing this tax over the current income tax and its multi-page forms.
“Family budgets are groaning under the strain of a heavy tax burden, which will only get worse as tax relief expires and higher rates kick in,” said Alexander. “Democratic leaders in Congress have already allowed the state and local sales tax deduction to expire and appear ready to let other tax relief measures for millions of lower- and middle-income Americans meet the same fate. Failing to act will lead to the largest tax hike in history, and that is one of the worst things we can do for family budgets. That’s why I believe Americans should have the option of filing a one-page federal income tax return with a 19 percent rate for two years and 17 percent rate thereafter. This proposal would save money, encourage growth, and relieve a great deal of the anxiety that occurs every spring when April 15 rolls around.”
Americans currently spend 113 days of every year working to pay their federal, state, and local taxes – almost twice the number of days they work to pay for housing and more than three times the number of days they work to pay for food.
Beginning in 2010, millions of lower- and middle-income Americans and small businesses will face significant tax hikes.
This week, Alexander will introduce legislation to establish an optional flat tax for individuals and businesses. The tax would be 19 percent for the first two years and 17 percent thereafter.
In 2005, taxpayers spent 6 billion hours and approximately $265 billion to comply with the tax code. Alexander’s flat tax option would drastically simplify this process by allowing taxpayers to file a one-page tax return.
Americans would not pay taxes on their income until it reached a certain level. For a married couple filing jointly, the exemption level would be $25,580. For a single head of household, the exemption level would be $16,330, and for a single person, the exemption level would be $12,790. The exemption for each dependent would be $5,510. All exemptions would be indexed to inflation.
Businesses would be taxed on total revenue minus expenses, which would include wages, pensions, and the cost of new business equipment.
Alexander’s tax proposal would eliminate the marriage penalty and the alternative minimum tax, which burdens millions of middle-class families each year.
Alexander’s proposal is designed to be revenue neutral. It is not designed to raise or lower taxes collected. Instead, it is designed to simplify the tax system and reduce the incredible amounts of money spent each year on compliance with the tax code.
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