The “Fair, Flat Tax Act of 2005” was introduced in late October by Oregon Senator Ron Wyden. The bill was introduced before the Presidential panel that suggested rewriting the nation’s tax laws. (Some have even suggested chucking the millions of pages of tax code and starting over from scratch.) The Presidential panel has suggested that tax laws be written to eliminate all deductions and credits, thereby replacing them with simpler benefits across the board.
The “Fair, Flat Tax Act of 2005” is a bit less off with their heads. The bill preserves the most popular deductions for home mortgage interest, charities and of course, the big tax deduction — kids. Their bill would also reduce the number of tax brackets from six to three. There would no longer be multiple corporate brackets, instead one flat corporate bracket would encompass all companies whether they employ ten or ten thousand or one hundred thousand.
Both bills are deisnged to allow taxpayers to file returns on a simple one-page form. Both keep credits for retirement funds, higher education and medical expenses.
Democrat Rahm Emanual of Illinois, the co-supporter of the “Fair, Flat Tax Act of 2005” said that “Today’s tax system is uncessarily complex, inefficient and unfair to middle class taxpayers. The current tax policies have created a culture of cheating and rampant tax avoidance. As a result, the middle class taxpayers are left to pick up the slack for those who don’t pay their fair share.”
The largest difference between the Presidential Panel recommendations and the “Fair, Flat Act of 2005” is how they handle capital gains, dividends and interest income. The Presidential plan reduces the rates whereas the “Fair, Flat Act of 2005” treats them the same as wages and salaries, requiring the same rate of tax on them. Effectively ending the idea that a cop working on the streets pays more taxes on his wages than someone who makes all their money through capital gains and dividends.
As far as tax alternatives go — the “Fair, Flat Act of 2005” may have a few kinks in it, but leveling the playing field may benefit all the players in the long run.
This information brought to you by https://incparadise.net. Looking after your incorporation needs.