# What the Flat Tax Act Actually Does

This bill creates a new optional tax system that lets people and businesses choose a simpler, flatter way to pay federal income taxes instead of using the current complicated system. If you opt in, you'd pay either 19% or 17% of your income as a flat rate, with no deductions, credits, or complicated calculations—just a straightforward percentage of what you earn.

Here's how it would work in practice. If you're an individual worker, you could choose to pay 19% on your wages minus a standard deduction (basically a set amount you don't pay tax on) for the first two years, then 17% after that. The standard deductions are pretty generous—around $32,500 for married couples filing jointly, $20,700 for heads of household, and $16,250 for single filers. You'd also get an extra $7,000 deduction per qualifying child. The key catch: once you make this election, you can't change your mind, and you lose access to all the tax credits and deductions that currently exist. So things like the child tax credit, education credits, or deductions for mortgage interest would all disappear for you.

For business owners, the system works similarly. They'd pay 19% on their business income (revenues minus the cost of supplies, equipment, and employee wages) for two years, then 17% after that. The bill also eliminates federal estate and gift taxes—meaning wealthy people could pass unlimited money to heirs without any federal tax. Additionally, the bill includes a constitutional-style rule requiring a two-thirds supermajority vote in Congress to raise these flat tax rates or reduce the standard deductions in the future, making it very difficult to change the system once it's in place.

Flat Tax Act

Burgess, Michael C.

Flat Tax Act This bill authorizes an individual or a person engaged in business activity to make an irrevocable election to be subject to a flat tax (in lieu of the existing income tax provisions) of 19% for the first two years after an election is made, and 17% thereafter. The bill calculates taxable income for individual taxpayers by subtracting a basic standard deduction and an additional standard deduction for each dependent from the total of wages, retirement distributions, and unemployment compensation. Business taxable income is gross active income reduced by certain deductions for the cost of business inputs, wages, and retirement contributions. The bill imposes an employer tax on the value of excludable compensation provided to employees not engaged in business activity of 19% for the first two years after an election is made under this bill, and 17% thereafter. The bill also repeals the estate, gift, and generation-skipping transfer taxes. A two-thirds vote of the House of Representatives and the Senate is required to increase the flat tax rate proposed by this bill or to reduce the amount of the standard deduction or business-related deductions allowed by this bill.