I 
109TH CONGRESS 
2D SESSION 
H. R. 4707 
To amend the Internal Revenue Code of 1986 to restructure and replace 
the income tax system of the United States to meet national priorities, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 8, 2006 
Mr. ENGLISH of Pennsylvania introduced the following bill; which was referred 
to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to restructure 
and replace the income tax system of the United States 
to meet national priorities, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 
TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Simplified USA Tax Act of 2006’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act a reference 
is made to the Code or to a section or provision of the
Code, the reference shall be considered to be made to the 
Internal Revenue Code of 1986 or to a section or provision 
thereof. 
(c) TABLE OF CONTENTS.— 
Sec. 1. Short title; amendment of 1986 Code; table of contents. 
TITLE I—FINDINGS; NEED TO REPLACE THE INCOME TAX 
Sec. 101. Replacing the income tax of the United States. 
TITLE II—SIMPLIFIED USA TAX FOR INDIVIDUALS 
Sec. 201. Simplified USA Tax for individuals. 
Sec. 202. Reorganization of the Code. 
TITLE III—SIMPLIFIED USA TAX FOR BUSINESSES 
Sec. 301. Repeal of present corporate income tax; new tax paid by corporations 
and other businesses. 
Sec. 302. Repeal of chapter 6. 
TITLE IV—DEFERRED COMPENSATION PLANS 
Sec. 401. Provisions saved. 
Sec. 402. Clerical Amendments. 
Sec. 403. Clerical Amendments. 
TITLE V—REPEAL OF ESTATE AND GIFT TAXES 
Sec. 501. Repeal of gratuitous transfer taxes. 
Sec. 502. Effective Date. 
TITLE VI—TECHNICAL AND ADMINISTRATIVE CHANGES; 
EFFECTIVE DATES 
Sec. 601. USA Tax Code. 
Sec. 602. Revisions to the Code. 
Sec. 603. Application of subtitle F. 
Sec. 604. Clerical amendment. 
TITLE I—FINDINGS; NEED TO 
REPLACE THE INCOME TAX 
SEC. 101. REPLACING THE INCOME TAX OF THE UNITED 
STATES. 
(a) FINDINGS.—The Congress finds that—
(1) the current Tax Code is irreparably flawed 
and must be replaced; 
(2) to enhance the liberty and protect the pri-
vacy of individuals, the Tax Code must be made sim-
pler and nonintrusive, and it must be applied 
evenhandedly to all; 
(3) to be fair and to provide for the prosperity 
of current and future generation, the Tax Code must 
give all individuals at all income levels an oppor-
tunity to save, invest and raise their standard of liv-
ing and that of their children; and 
(4) future economic growth requires a tax sys-
tem that facilitates successful competition in the 
global marketplace. 
(b) MAIN FEATURES OF SIMPLIFIED USA TAX SYS-
TEM.— 
(1) REPLACEMENT
OF
OLD
TAX
SYSTEM.— 
Chapter 1 of subtitle A (related to income taxes) of 
the Code is repealed and replaced for years begin-
ning after 2006. 
(2) Estate and gift tax repealed. 
(3) NEW TAX SYSTEM.—The Simplified USA 
Tax consists of— 
(A) a simplified tax collected from individ-
uals, that for years after 2006 replaces the in-
come tax imposed on individuals by section 1 of 
the Code, and 
(B) a simplified tax collected from corpora-
tions and other businesses, that for years after 
2006 replaces the income tax imposed on cor-
porations by section 11 of the Code. 
(4) SIMPLIFIED USA TAX ON GROSS PROFITS.— 
Corporations and other businesses pay tax on their 
annual gross profits from business conducted in the 
United States, except that— 
(A) export revenues are excluded, and 
(B) imports are taxed. 
(5) SIMPLIFIED USA TAX ON INCOME.—Individ-
uals pay tax on their annual income from wages, 
dividends, interest, and other financial income (in-
cluding sales of property), except that— 
(A) investment earnings on previously 
taxed income that is placed in a Roth IRA is 
exempt from further taxation, 
(B) a portion of each family’s income is ex-
empt from tax, and 
(C) deductions are allowed for— 
(i) education costs, 
(ii) religious, charitable, and other 
philanthropic donations,
(iii) home mortgage interest pay-
ments, and 
(iv) contributions to qualified IRAs. 
(6) CREDIT FOR FICA PAYROLL TAXES PAID.— 
The amount of tax due is reduced by the payroll tax 
that is— 
(A) in the case of an employee, withheld 
from wages, or 
(B) in the case of a corporation or other 
business, paid by the employer. 
(c) CONCEPTS AND STRUCTURE OF NEW TAX SYS-
TEM.— 
(1) GUIDING PRINCIPLES OF THE SIMPLIFIED 
USA
TAX
SYSTEM.—The Simplified USA Tax is 
based on the following principles: 
(A) National wealth and well-being depend 
on the work, skill, and savings and investment 
of people. 
(B) Businesses are people and their capital 
working together. 
(C) Capital makes people more productive. 
(D) Everyone benefits from a growing 
stock of national savings which in turn allows 
for a growing stock of physical and human cap-
ital.
(E) Under the Simplified USA Tax, the 
deferral of taxation on investments in human 
capital represents an investment by the Federal 
government in the nation’s capital stock and 
the Federal government shares in the return on 
its investment in the form of higher economic 
output and revenues in the future. 
(2) SINGLE TAX IN 2 PARTS.—The Simplified 
USA Tax is composed of a business tax and an indi-
vidual tax which are 2 parts of a single tax system 
that subjects all income produced and received to 
taxation once and only once. The 2 parts are as fol-
lows: 
(A) BUSINESS TAX AT THE SOURCE OF IN-
COME.—Tax is paid by corporations and other 
businesses which produce and sell goods and 
services that are— 
(i) the source of nearly all the gross 
domestic product of the United States, and 
(ii) the ultimate source of income re-
ceived by individuals. 
(B) INDIVIDUAL
TAX
ON
INCOME
RE-
CEIVED.—Tax is paid by individuals when they 
receive wages and salaries as compensation for 
gross domestic product created by their work.