American workers are the most creative and dynamic people in the world, if they aren’t shackled by Washington. As President Reagan showed—and before him, President Kennedy in the 1960s (average annual growth of 5.3%) and Presidents Harding and Coolidge in the 1920s (4.7% growth)—tax reform is a powerful lever for spurring economic expansion. Along with reducing red tape on business and restoring sound money, it can make the U.S. economy boom again.
That’s why I’m proposing the Simple Flat Tax as the cornerstone of my economic agenda.
In constructing my plan, I had several requirements. The plan should: spur robust economic growth and job creation, while raising after-tax income for all Americans; be dramatically simpler, to allow working people to file their taxes with a postcard or phone app; and shrink Washington by getting rid of the rat’s nest of complex tax requirements, credits and loopholes.
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With these goals in mind, based on a structure suggested by President Reagan’s tax adviser, Arthur Laffer, my Simple Flat Tax plan features the following:
- For a family of four, no taxes whatsoever (income or payroll) on the first $36,000 of income.
- Above that level, a 10% flat tax on all individual income from wages and investment.
- No death tax, alternative minimum tax or ObamaCare taxes.
- Elimination of the payroll tax and the corporate income tax, to be replaced by a 16% Business Flat Tax. This would tax companies’ gross receipts from sales of goods and services, less purchases from other businesses, including capital investment. Simple, efficient, fair.
- A Universal Savings Account, which would allow every American to save up to $25,000 annually on a tax-deferred basis for any purpose.
Today, the U.S. taxes American producers that export goods, but it imposes no burden on imports. My business tax is border-adjusted, so exports are free of tax and imports pay the same business-flat-tax rate as U.S.-produced goods. By shifting to a territorial tax system that doesn’t tax income earned overseas twice, my plan will reverse the incentive for U.S. companies to relocate overseas. Instead, businesses will be relocating to America.
The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by the owners of this website.