On the 2017 version of Tax Day, Sen. Richard Shelby (R-Ala.) introduced legislation in the U.S. Senate aimed at creating a flat tax on all income.
S.893 is known as the Simplified, Manageable and Responsible Tax Act (or SMART). It would establish a flat tax rate of 17 percent on all income. The exemptions would be personal exemptions of $14,590 for a single person, $18,630 for a head of a household, $21,190 for a married couple filing jointly and $6,290 for each dependent.
Those exemptions would also be indexed to the consumer price index to ensure that inflation does not increase taxes on its own. Earnings from savings would also not be included as taxable income, which Shelby calls an immediate tax cut for virtually all Americans.
“On Tax Day, the American people are reminded that our nation’s tax code is unnecessarily complex, confusing, and inefficient. The SMART Act is a straightforward solution that would require taxpayers to only file a simple postcard size return, which would save Americans time and money. The SMART Act would also allow businesses to redirect resources away from tax compliance and instead focus on expanding their businesses and creating jobs,” Shelby said in a release.
Shelby also emphasized that closing the loopholes for individuals and businesses through this act would create broad-based lower tax rates that would give them competitive edge and the opportunity to create and retain jobs.
With an administration that now seems eager to work on reforming the American tax code, initiatives such as this could actually see the light of day. Thus far, the bill has been introduced in the Senate and referred to the Finance Committee. We will keep you updated on where it goes from here.