THE FREEDOM TO FLOURISH

A Pro-Growth Tax System Rooted in America’s Founding Principles

Our current tax system is indefensible. It is impossibly complex, outrageously expensive, menacingly intrusive, economically destructive, and patently unfair.

We need to replace this corrupt tax code with an honest, straightforward tax plan that reflects America’s highest values and unleashes our greatest potential – based on simplicity, fairness and common sense. Instead of catering to special interests with convoluted tax breaks and preferential treatment, we need to adopt a genuine flat tax that treats everyone the same. It is time to throw out today’s four-million-word abomination of tax laws and regulations and begin anew.

So long as Americans are saddled with a tax code of mind-boggling complexity and endless avenues for fraud, we can never live up to the vision of our Founders as a nation that treats all citizens equally – and supports initiative, entrepreneurship, and personal endeavor. High marginal tax rates weaken the link between effort and reward; they depress the aspirations of individual taxpayers and undermine the economic strength of our nation.

Our current tax system not only saps the human will to innovate – to take risks and be productive – it compromises the moral integrity of a self-governing nation. How can we justify a tax code that makes hard-working middle-class families pay their full tax liabilities while the wealthy are enticed to utilize an array of deductions, loopholes and shelters to reduce their own taxable income? Even well-meaning taxpayers in the upper brackets find it prudent to employ an army of tax attorneys and accountants to take advantage of exclusions. Out-of-pocket compliance costs for such shenanigans total an unconscionable $32 billion annually, according to the Federal Register, and they are growing. More distressing is the estimated 6.1 billion hours of productive labor time lost each year as citizens earnestly try to comply with our complex and invasive tax code; the National Taxpayers Union Foundation puts a value of $202.1 billion on these needlessly wasted and often frustrating hours.   

Meanwhile, the economic burden imposed by our outdated and inequitable federal tax code has induced a number of large U.S. companies to relocate abroad to escape America’s punishing 35% corporate tax rate – the highest in the developed world. Double taxation and irrational tax rules give these companies the incentive to keep foreign profits overseas rather than repatriate gains back home to expand production and create new jobs. At the same time, certain types of private investment funds – hedge, private equity, real estate – have learned to “game” existing loopholes and differential tax rates to earn billions on Wall Street while shaving their tax liability to rates below what middle-income families must pay.

This must end. The current U.S. tax code – all 2,652 pages of it – is beyond repair. To renew America’s commitment to equity and opportunity, we need to replace this failed mess with a simplified, rational tax system based on common sense. American citizens are right to demand transparency and equal treatment in the collection of taxes; they are wise in wanting to rein in the dangerously adversarial behavior of the Internal Revenue Service. We need a pro-growth tax plan worthy of our trust.

 

Dr. Ben Carson’s Flat Tax: The Real Deal

The goal of tax policy is to raise revenue – not to redistribute wealth. The current tax code is a muddle of mushrooming rates, deductions, preferences, and transfers of wealth from one constituency to another. No wonder Americans distrust it; no wonder our nation suffers from the corrosive effects of forcing citizens to abide by tax rules that are widely viewed as unfair.

A simple and low flat tax is the solution. A single-rate system levels the playing field by eliminating current distortions that make tax breaks worth more when a person’s income is higher. And while a single-rate system keeps pace with the taxpayer who is climbing the hill of economic opportunity, it does not discourage that advancement with higher rates. It makes no sense that the harder someone works, the more heavily they are taxed.

The Carson Flat Tax stands alone as a true 15% tax rate with no deductions, no shelters, and no loopholes – period. You earn ten times as much as your neighbor; you pay ten times as much in taxes. That’s the deal.

Meets the Tests of Efficiency, Equity, and Simplicity

·         Taxes all income once and only once – and does so uniformly at a low 15% rate. Personal and corporate income is taxed at the same level.

 

·         Eliminates the double taxation of income by doing away with the taxation of capital gains, dividends, and interest income at the personal level.

 

·         The 15% rate applies to all businesses – including partnerships, proprietorships, and self-employment – not just corporations. Replaces the hodgepodge of depreciation schedules with an immediate 100% write-off of all investment, providing an effective incentive to grow.

 

·         Neutralizes special interests by eliminating income deductions for mortgage interest, charitable giving, and for state and local taxes – loopholes that provide unequal benefits to higher-income Americans.

 

·         Grants a tax-free allowance to lowest-income Americans in acknowledgement of basic economic needs at the poverty level. The first $24,250 of income for a family of four would not be taxed; the family pays a tax of 15% on its income above that allowance.

 

·         Eliminates the alternative minimum tax, which forces middle-income Americans to calculate their tax liability twice – once under the rules of the regular income tax code, and again under the AMT rules – and then pay whichever is higher.

 

·         Abolishes the death tax – an affront and disgrace.

 

The Carson Flat Tax is entirely faithful to the single-rate model designed by economists Robert Hall and Alvin Rabushka of the Hoover Institution at Stanford University. Unlike the proposals of other Republican candidates for the presidency, the Carson Flat Tax does not compromise on deductions or waffle on loopholes. Nor does it claim to be a flat tax while instead deriving the bulk of its revenues by imposing a higher “business flat tax” on U.S. companies that amounts to a value-added tax – a European-style form of taxation that conservatives have generally opposed. Tax plans that include both an income tax and a VAT run the risk of subjecting Americans to a double whammy of tax encumbrances. 

The beauty of the Carson Flat Tax is that it truly applies one rate to every form of income at its source – preventing leakages that allow income to escape the system or be hidden from view. It does not pit one set of American taxpayers against another by stratifying them into increasingly punitive tax brackets. Other candidates claim they are seeking tax simplification, yet nevertheless propose plans that require two, three, and even four different tax rates.         

Simplicity is a virtue; it serves as the hallmark of honesty and fairness. The Carson Flat Tax has an elegance and fundamental integrity that transcends more complicated and vexing approaches. It puts an end to the divisiveness of preferential treatment and exclusions that are part and parcel of current IRS regulations. True to the ideal of our Founders, a single tax rate puts all citizens in the same relationship with government.

 

Everybody Gains and America Prospers

U.S. economic growth under the Carson Flat Tax is projected to have an impact of tremendous magnitude on the lives of all Americans – with net gains in income across all levels – as our nation’s real gross domestic product surges more than 16.2% higher over the next 10 years than would otherwise be expected using baseline assumptions under the status quo tax system. According to the nonpartisan Tax Foundation, which performed the calculations using a dynamic model that takes into account the effect of tax changes on jobs, wages, and investment, the Carson Flat Tax will generate a boom for the overall economy even as it liberates individuals and businesses from the tedious task of complicated tax filings. The current economic growth trend rate of 2.2% will be turbocharged by an additional 1.6% annually – empowering America to perform at a level significantly above our nation’s historical 3.24% annual average from 1947 to 2015. Dynamic indeed!   

The 16.2% bonus expansion in the U.S. economy resulting from the Carson Flat Tax translates into 5,413,000 additional jobs; that’s over 45,000 more jobs that will be created monthly. The nearly 11% increase in wages predicted under the 15% single tax rate will fuel commerce and raise living standards across the nation. Americans at every level of income – factory workers, small-business owners, high-tech engineers – will experience a significant raise in their after-tax income. For middle-income taxpayers, the relief will be gratifying as they pocket nearly 14% more in after-tax income under the Carson Flat Tax.

The secret weapon of this move to an efficient, fair and simple tax system is that it unleashes the economic potential of every American and strengthens our great nation. Savings and investment are encouraged, rather than penalized. The level of capital stock is projected to rise over the next decade by 46.9% under the Carson Flat Tax – expanding U.S. production capabilities and employing millions more American workers. Disenfranchised corporations will have stepped-up incentives to return home, bringing accrued financial gains, job openings, and innovative ideas with them as they see opportunities to put these additional resources to work in a newly-competitive America. Ease of compliance will serve as a catalyst for productive economic activity, and in conjunction with the cathartic impact of tax code clarity, will unlock an estimated $2 trillion in reportable income that has been kept back or deliberately concealed. Recouping the estimated $450 billion in annual taxes missed by a tax system that is appallingly inefficient and invites abuse will provide a windfall of legitimate revenue gains.      

These cumulative economic effects will benefit us all – tremendously, as projections testify – yet the greatest virtue of the Carson Flat Tax is its power to rekindle the inspiration of our nation’s founding ideals. Everyone is equal under the law. Each citizen shares in the rights and responsibilities of being an American. The dignity of every citizen requires that they have a voice and a share in the funding of our government. Removing massive numbers from the tax rolls is demeaning to the collective self-respect of all Americans and denies our nation’s creed of equal rules, equal rights. The Carson Flat Tax – with its single 15% tax rate applied to all income, whether personal or business, whether you earn millions or have just started to succeed beyond the allowance level – treats everybody equally and honors the contribution of every citizen.  

At the same time, it shows respect for taxpayers by liberating individuals from the stressful, wearying chore of tax preparation. It is time for Americans to reclaim the right to pursue their personal and business ambitions without being sidetracked by the distortions of ill-conceived tax regulations – in other words, we must have the freedom the flourish.

Fairness, impartiality, transparency: The Carson Flat Tax delivers on all counts. It’s no surprise that these qualities accord with our shared notion of common sense. America’s essential character has always reflected the deep-rooted truths that inform our faith and define our purpose: One nation, under God, indivisible, with liberty and justice for all.        
 

 

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