[Congressional Record Volume 154, Number 58 (Monday, April 14, 2008)]
[Senate]
[Pages S2959-S2960]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                FLAT TAX

  Mr. ALEXANDER. Mr. President, today most Americans are struggling 
with filling out their tax returns which are due tomorrow. This week I 
am introducing legislation that will make it possible for an American 
taxpayer to file his or her tax return on one page, a one-page optional 
flat tax on individuals and businesses at the rate of 19 percent for 
the first two years and 17 percent thereafter. Think what a change that 
would be. Taxpayers spend an average of over 26 hours to complete tax 
returns; and 13.6 hours just to complete form 1040.
  Think how different it would be to simply fill out one page and turn 
that in. In 2005, taxpayers spent 6 billion hours and approximately 
$265 billion to comply with the Tax Code. Think how much extra leisure 
time or productive work time we could have if every American had the 
option of a one-page simplified tax return.
  Mr. President, $705 was the estimated compliance cost for a 
Tennessean in 2005. And operating costs for the Internal Revenue 
Service almost tripled between 1970 and 2004. Think how much money we 
would save if every American had the option of filing a one-page, 17-
percent flat tax and if every American business had the option of doing 
the same.
  Here is what the optional flat tax legislation I will be introducing 
this week will do. As I mentioned earlier, it will simplify the Tax 
Code by providing an optional flat tax on individuals and

[[Page S2960]]

businesses. It will be a 19-percent flat tax for the first 2 years, 17 
percent flat tax after the first 2 years, and it would create the 
option to file, as I mentioned, a simple one-page return.
  The legislation I am introducing is almost identical to H.R. 1040 
introduced by Congressman Michael Burgess, a Republican from Texas, in 
the House of Representatives. Congressman Burgess introduced his 
legislation on February 2007 and it has six cosponsors.
  My legislation is very straightforward. If an individual selects the 
option to pay a flat tax in lieu of the current income tax, the option 
is irrevocable. Under the flat tax, taxable income has a very simple 
definition. It will consist simply of wages and pensions. You do not 
start paying taxes on your income--wages and pensions--until you reach 
a certain exemption level. For a married couple filing jointly, the 
exemption level is $25,580, indexed to inflation. For the single head 
of a household, you wouldn't start paying taxes until you reached 
$16,330, indexed for inflation; for a single person, $12,790, indexed 
for inflation; and $5,510 for each dependent.
  For example, a family of four would not pay the flat tax until the 
family's combined income reached $36,600. That is $25,580 for joint 
filers plus $5,510 times two for the two dependents. No other 
deductions would exist.
  This optional flat tax would eliminate the marriage penalty, so it is 
pro-family. This optional flat tax would eliminate the millionaires 
tax, which was put in place in the late 1960s to catch a few 
millionaires and today is catching millions of middle-class Americans. 
It is called the alternative minimum tax or AMT.
  The optional flat tax for businesses is equally straightforward. It 
gives the business the option to pay a flat tax in lieu of the current 
corporate tax structure. Once a business selects this option, it is 
irrevocable. As it is on the individual income tax form, there is a 19-
percent tax rate for the first 2 years and then a 17-percent tax rate 
for all other years. Businesses would be taxed on the difference of 
total revenue minus expenses--again, a very simple definition of 
income. Expenses would include wages, pensions, and the costs of new 
business equipment. This would provide for the immediate expensing of 
business capital equipment. This immediate expensing should be a very 
pro-growth provision in our Tax Code--rather than the current Code 
which requires spreading it out over a number of years. No other 
deductions would exist.
  The current tax system is overly complicated and lengthy. The Tax 
Code and corresponding regulations are over 67,000 pages and include 7 
million words. It was only 400 pages in 1913 when the Federal income 
tax was first introduced, and it has now grown to over 67,000 pages.
  Taxpayers are expected to understand and comply with this complicated 
Tax Code and it gets increasingly impossible to do. That is why I, and 
a great many Americans and American businesses, will welcome the 
opportunity to file a one-page, simplified flat tax in lieu of the 
current system.
  The optional flat tax that I propose is intended to be revenue 
neutral. It is intended, in other words, neither to raise more revenues 
than the current tax system or less revenues than the current tax 
system. Arguably, a simpler tax will raise more revenues because a 
great many people pay less in taxes because they simply do not 
understand the forms. But the intention of my legislation is that the 
taxes collected, the revenue level, will be the same.
  Finally, I urge that our nation's revenue level is not about to stay 
the same. Already the largest share of the average American's budget 
goes to pay taxes. Taxes are high. Americans currently spend 113 days 
of every year working to pay their Federal, State, and local taxes--
almost twice the number of days they work to pay for housing and more 
than three times the number of days they work to pay for food.
  Beginning in 2010, the amount of time Americans currently spend 
working to satisfy their tax bills will increase as millions of lower- 
and middle-income Americans and small businesses face significant tax 
hikes. Democratic leaders in Congress have already allowed the state 
and local sales tax exemption, which affects Tennesseans, to expire. 
That is $400 a year for 600,000 Tennesseans, and the Democrats appear 
to be ready to let tax relief for millions of lower and middle-income 
Americans meet the same fate when those tax levels expire in 2010.
  Failure of Congress to act to stop these tax hikes will result in the 
largest tax increase in United States history, and that is one of the 
worst things we could do to the family budget. Taxes are too high today 
and we are about to face the largest tax increase in United States 
history.
  But while we are debating tax issues in the Senate, we can do 
something much simpler so that next year, when Americans go about 
completing their tax returns, they do not spend an average of 26 hours. 
Instead, they fill out one page. They do not take an average of 13.6 
hours to complete form 1040; they fill out one page. Compliance costs 
are not $265 billion; they are dramatically reduced. Compliance costs 
for Tennesseans, $705 dollars in 2005, go down by hundreds of dollars a 
year.
  The operating costs of the IRS ought to be cut, instead of 
increasing, as they review one-page optional tax forms. The same would 
be true for businesses who also would have the option of filing a flat 
17 percent tax, on one page. So as we look ahead to tomorrow and filing 
our tax returns, and we think about the upcoming debate about whether 
to stop the largest tax increase in history, let's get on a 
constructive page and say to the American people: By this time next 
year, April 15, 2009, you will have the option of filing a one-page 
Federal income tax return with a 19-percent rate for 2 years and 17 
percent rate thereafter; businesses will get the same thing.
  It will save money. It will encourage growth, and it will relieve a 
great deal of anxiety that occurs every spring when April 15 rolls 
around.
  I yield the floor, and I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. WEBB. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mrs. Boxer). Without objection, it is so 
ordered.
  Mr. WEBB. I ask unanimous consent to speak as in morning business for 
5 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WEBB. I thank the Chair.

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