It is designated H.R. 1040 in the House and, upon reintroduction in the Senate, will be S. 1040. T he bill repeals the current income tax in total and replaces it with a low, simple flat tax. Under the bill, every dollar of income in the economy is taxed one time at the same rate. Wage and pension income is collected from individuals. All other income, including investment income, is collected from businesses.
Individuals fill out a tax return the size of a postcard, like Form One shown below.
Business owners pay the same tax rate and would file an equally straightforward tax form. I ndividuals pay 17 percent of all wages, salaries, and pensions, after subtracting allowances. These allowances are indexed to inflation. The flat tax replaces the current income tax system, but does not affect the Social Security and Medicare payroll taxes. Social Security benefits would not be taxed.