U.S. Sen. Richard Shelby, R-Alabama, reintroduced legislation to establish a flat tax on all income on Monday.
Shelby has been a strong advocated for the Simplified, Manageable and Responsible Tax Act since his election to the Senate in 1986 and has introduced the legislation in each Congress.
“Every year, Tax Day is a reminder to the American people that our nation’s tax code is complex, confusing and costly,” Shelby said. “The recent success of the Tax Cuts and Jobs Act is certainly progress, but if the SMART Act was in place now, taxpayers would file a return the size of a postcard, and every American would be taxed equally and at the same rate. I believe this legislation would result in an immediate tax cut for virtually all taxpayers, while also reducing the size, scope and complexity of the IRS.”
The SMART Act establishes a flat income tax of 17 percent on all income. The only exception would be personal exemptions of $14,480 for a single person, $18,490 for a head of a household, $28,960 for a married couple filing jointly and $6,250 for each dependent.
These allowances would also be adjusted to the consumer price index in order to prevent inflation from raising our tax burden. To prevent the double taxation of income, earnings from savings would not be included as taxable income, resulting in an immediate tax cut for virtually all hardworking taxpayers.
By closing loopholes for individuals and businesses, the SMART Act would create broad-based, lower tax rates that would give American individuals and businesses a competitive edge, create and retain jobs in the United States and curb offshoring.
The then Republican-controlled U.S. Congress passed the Tax Cuts and Jobs Act, which cut most people’s taxes and simplified the tax code somewhat.
More than 65 percent of U.S. taxpayers paid $100 or more less in taxes in 2018 than they did prior to reform. Thirty percent saw no significant change, and about 6 percent saw an increase due to changes in deductions. Many taxpayers do not understand, however, that a tax refund simply means too much money was withheld from their check, and they gave the government what was essentially a no interest loan. The Tax Cuts and Jobs Act made the withholding more accurate, meaning the government owed fewer Americans and thus some were surprised to see their tax refunds drop from last year.
The tax rate cuts for individual filers are not permanent like the corporate tax cuts and will go up automatically in 2025 without action from Congress.
Senator Shelby is serving in his sixth term in the United States Senate following four terms in the U.S. House of Representatives and two terms in the Alabama Senate.