Dick Armey on Tax Reform
Former Republican Representative (TX-26)
Flat tax of 17% for businesses too
As I said in my new bok, The Freedom Revolution, I believe the most enduring revolutions bring about the simplest reforms. In my views the simplest and most beneficial reform we could make to spur economic growth and revise stagnant family wages
is to scrap today’s Internal Revenue Code and start over from scratch.
I am convinced that the Flat Tax is in America’s future. Here is how it works. Rather than tinkering, we scrap the entire tax code, corporate and personal, and replace it with one
flat rate that applies to all Americans. We leave just one exception, a generous family allowance to ensure that every family has the first claim to its own income sufficient to support itself. A typical family of four must earn $33,300
before it owes a cent of federal income tax. For earnings beyond that, everybody pays a flat 17% on all income above the allowance. No deductions. No loopholes. No tax breaks. No tables. No schedules. No nothing.
Source: United We Stand America Conference, p. 95-96
Aug 12, 1995
3/5 super-majority to raise tax rates
[Since last year’s Flat Tax proposal], we’ve added a new provision that requires a three-fifths super-majority to raise the rate, add additional rates, create loopholes, or shrink the family allowance. We are absolutely determined that the Flat Tax
stay flat. Let me share some of the reasons why people like the Flat Tax.
Source: United We Stand America Conference, p. 96-97
Aug 12, 1995
- It is incredibly simple. It would save the American people $232 billion a year in time and paperwork costs.
- Unlike today’s tax code, the Flat Tax is honest. By sweeping away
all the special-interest loopholes, it shows us right up front how much government is really costing us.
- The Flat Tax will be a powerful engine of economic growth. The Flat Tax wipes out the perverse bias against savings [created by taxing
savings interest, which will spur growth via more savings].
- Perhaps most important, the Flat Tax is fair. When you tax everyone at the same rate, the rich pay a lot more in taxes than the middle class or the poor.
Eliminate charitable deduction
What about the charitable deduction? Will losing it hurt charities? Almost half of all charitable contributions are not even claimed as deductions. But more tellingly, during the 1980s, the so-called decade of greed, charitable giving actually
doubled and religious giving tripled, even as the deduction’s value as a tax break declined. We must ask why. Because people had more money in their pockets. The American people responded to greater prosperity by opening their wallets to their neighbors.
Source: United We Stand America Conference, p. 99
Aug 12, 1995
Tax unearned income at same rate as regular income
[A concern about m Flat Tax plan] comes from the class-welfare crowd who are alleging that our plan does not tax so-called unearned income. They say we are letting wealthy stockholders off the tax hook.
This is completely untrue. Our plan taxes unearned income at exactly the same rate as wages. What we do not do is tax is twice. Under our plan all income is taxed at the same 17% rate with no exceptions.
Source: United We Stand America Conference, p. 98
Aug 12, 1995
Flat tax of 17% with family allowance of $33,000
Each year you calculate your income, fill out a postcard-sized form, make out a check, and drop it in the mail. Here is the best part. You are done with the IRS until next year. Instead of taking 11 hours to do your taxes,
as the average family does today, you could do it in 11 minutes, maybe less. If you have business income, the process is almost identical. Whether you are IBM or a mom and pop grocery, you still fill out a postcard-sized form.
Just subtract your business expenses from your revenue and pay 17% on the remainder.
Imagine the new world that will dawn. Gone will be today’s 480 different tax forms and the 280 forms that explain how to fill out the 480 forms.
Whole armies of tax attorneys and lobbyists will be out looking for productive work. As for all those IRS agents and auditors, instead of harassing you, they will be sitting silently at their desks like the Maytag repairman.
Source: United We Stand America Conference, p. 96
Aug 12, 1995
Replace home mortgage deduction with bigger standard ded.
[A concern about my Flat Tax plan] comes from people who ask, “Will eliminating the home mortgage interest deduction hurt the real estate industry?” the answer is not as much as lower interest rates will help it.
While our tax plan would end the interest deduction, it also ends tax on interest earnings. As a result nothing changes. Both borrowers and lenders are held harmless. What the homeowner loses in deductions, he gains in lower interest rates.
In fact, he comes out ahead on the deal because the Flat Tax ends the bias against saving, causing the capital pool to swell and driving interest rates down further.
Frankly, homeowners are not as wedded to this supposedly sacred cow of the interest
deduction as you might think. By a 3-to-1 margin in a recent poll, homeowners said they are willing to forego the mortgage deduction if that loss is offset by a reduction in their tax bill by a similar amount, and that’s what this plan does.
Source: United We Stand America Conference, p. 98-99
Aug 12, 1995
Voted YES on $99 B economic stimulus: capital gains & income tax cuts.
Vote to pass a bill that would grant $99.5 billion in federal tax cuts in fiscal 2002, for businesses and individuals.
The bill would allow more individuals to receive immediate $300 refunds, and lower the capital gains tax rate from 20% to 18%.
Bill HR 3090
; vote number 2001-404
on Oct 24, 2001
Voted YES on Tax cut package of $958 B over 10 years.
Vote to pass a bill that would cut all income tax rates and make other tax cuts of $958.2 billion over 10 years. The bill would convert the five existing tax rate brackets, which range from 15 to 39.6 percent, to a system of four brackets with rates of 10 to 33 percent.
Reference: Bill sponsored by Thomas, R-CA;
Bill HR 1836
; vote number 2001-118
on May 16, 2001
Voted YES on eliminating the Estate Tax ("death tax").
Vote to pass a bill that would gradually reduce revenue by $185.5 billion over 10 years with a repeal of the estate tax by 2011.
Reference: Bill sponsored by Dunn, R-WA;
Bill HR 8
; vote number 2001-84
on Apr 4, 2001
Voted YES on eliminating the "marriage penalty".
Vote on a bill that would reduce taxes for married couple by approximately $195 billion over 10 years by removing provisions that make taxes for married couples higher than those for two single people. The bill is identical to HR 6 that was passed by the House in February, 2000.
Reference: Bill sponsored by Archer, R-TX;
Bill HR 4810
; vote number 2000-392
on Jul 12, 2000
Voted YES on $46 billion in tax cuts for small business.
Provide an estimated $46 billion in tax cuts over five years. Raise the minimum wage by $1 an hour over two years. Reduce estate and gift taxes, grant a full deduction on health insurance for self-employed individuals, increase the deductible percentage of business meal expenses to 60 percent in 2002, and designate 15 renewal communities in urban rural areas.
Reference: Bill sponsored by Lazio, R-NY;
Bill HR 3081
; vote number 2000-41
on Mar 9, 2000
Reduce the capital gains tax .
Armey co-sponsored the Capital Gains Tax Reduction Act:
Amend the Internal Revenue Code of 1986 to provide maximum rates of tax on capital gains of 15 percent for individuals and 28 percent for corporations and to index the basis of assets of individuals for purposes of determining gains and losses.
Source: House Resolution Sponsorship 01-HR15 on Jan 3, 2001
Phaseout the death tax.
Armey co-sponsored the Death Tax Elimination Act:
Title: To amend the Internal Revenue Code of 1986 to phaseout the estate and gift taxes over a 10-year period.
Summary: Repeals, effective January 1, 2011, current provisions relating to the basis of property acquired from a decedent. Provides with respect to property acquired from a decedent dying on January 1, 2011, or later that:
Source: House Resolution Sponsorship 01-HR8 on Mar 14, 2001
- property shall be treated as transferred by gift; and
- the basis of the person acquiring the property shall be the lesser of the adjusted basis of the decedent or the fair market value of the property at the date of the decedent's death.
- Requires specified information to be reported concerning non-cash assets over $1.3 million transferred at death and certain gifts exceeding $25,000.
- Makes the exclusion of gain on the sale of a principal residence available to heirs.
- Revises current provisions concerning the transfer of farm real to provide that gain on such
exchange shall be recognized to the estate only to the extent that the fair market value of such property exceeds such value on the date of death.
- Provides a similar rule for certain trusts.
- Amends the special rules for allocation of the generation-skipping tax (GST) exemption to provide that if any individual makes an indirect skip during such individual's lifetime, any unused portion of such individual's GST exemption shall be allocated to the property transferred to the extent necessary to make the inclusion ratio for such property zero; and
- if the amount of the indirect skip exceeds such unused portion, the entire unused portion shall be allocated to the property transferred.
- Provides that, if an allocation of the GST exemption to any transfers of property is deemed to have been made at the close of an estate tax inclusion period, the value of the property shall be its value at such time.
Co-chair of the Congressional Flat Tax Caucus.
Armey is the chair the Congressional Flat Tax Caucus
"Our current income tax system is broken. It is complex; unfair; inhibits saving, investment and job creation; imposes a heavy burden on families; and undermines the integrity of the Democratic process. It cannot be repaired by any tinkering or fine-tuning. It must be completely repealed and replaced."
THE FLAT TAX:
Source: Flat Tax Caucus website 07-FTC0 on Nov 6, 2007
- It is SIMPLER--the flat tax will save taxpayers time and money
- It is FAIRER--The flat tax will treat everyone the same
- It is PRO-GROWTH--the flat tax will stimulate economic growth
Adopt a single-rate tax system.
Armey signed the Contract From America
The Contract from America, clause 4. Enact Fundamental Tax Reform:
Adopt a simple and fair single-rate tax system by scrapping the internal revenue code and replacing it with one that is no longer than 4,543 words--the length of the original Constitution.
Source: The Contract From America 10-CFA04 on Jul 8, 2010
Repeal tax hikes in capital gains and death taxes.
Armey signed the Contract From America
The Contract from America, clause 10. Stop the Tax Hikes:
Permanently repeal all tax hikes, including those to the income, capital gains, and death taxes, currently scheduled to begin in 2011.
Source: The Contract From America 10-CFA10 on Jul 8, 2010
Repeal marriage tax; cut middle class taxes.
Armey signed the Contract with America:
[As part of the Contract with America, within 100 days we pledge to bring to the House Floor the following bill]:
The American Dream Restoration Act:
Source: Contract with America 93-CWA7 on Sep 27, 1994
A $500-per-child tax credit, begin repeal of the marriage tax penalty, and creation of American Dream Savings Accounts to provide middle-class tax relief.
Page last updated: Mar 08, 2011