,i #aafth ,,congress #ast ,session ,h4 ,r4 #ajdj ,,in ,,the ,,house ,,of ,,representatives ,february #g1 #bjai,mr4 ,burgess introduced the following bill2 which was referred to the ,committee on ,ways and ,means1 and in addition to the ,committee on ,rules1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide taxpayers a flat tax alternative to the current income tax system4 #a4 ,short title ,this ,act may be cited as the ,flat ,tax ,act4 #b4 ,the flat tax 7a7 ,in general ,subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after part ,,vii the following new part3 ,,viii ,the ,flat ,tax ,sec4 #fj4 ,irrevocable election to be subject to flat tax4 ,sec4 #fj;,a4 ,tax imposed on individuals4 ,sec4 #fj;,b4 ,tax imposed on business activities4 ,sec4 #fj;,c4 ,tax on noncash compensation provided to employees not engaged in business activity4 #fj4 ,irrevocable election to be subject to flat tax 7a7 ,individual 7#a7 ,in general ,except as provided in paragraph 7#b71 in lieu of the tax imposed by sections #a 7relating to tax imposed7 and #ee 7relating to alternative minimum tax imposed71 under regulations prescribed by the ,secretary1 an individual may make an irrevocable election to be subject to the tax imposed by this part4 7#b7 ,innocent spouse exception ,an individual who has made an election under paragraph 7#a7 and who subsequently obtains relief of liability for tax under section #fjae7;b7 may1 not later than #a year after the date such relief is granted1 revoke the election made under paragraph 7#a74 7b7 ,person engaged in business activity ,in lieu of the tax imposed by sections #aa 7relating to tax imposed7 and #ee 7relating to alternative minimum tax imposed71 under regulations prescribed by the ,secretary1 a person engaged in business activity may make an irrevocable election to be subject to the tax imposed by this part4 7c7 ,disallowance of ,credits ,no credit shall be allowed under this chapter for any taxable year to any person with respect to whom an election under subsection 7a7 or 7b7 is in effect4 #fj;,a4 ,tax imposed on individuals 7a7 ,in general ,there is hereby imposed on the taxable income of every individual who makes an election to be subject to this part a tax equal to-- 7#a7 #ai percent of the taxable income of such individual for such taxable year in the case of the first #b taxable years of the individual beginning with the taxable year for which the election is made1 and 7#b7 #ag percent of the taxable income of such individual for such taxable year in the case of all taxable years subsequent to the taxable years described in paragraph 7#a74 7b7 ,taxable income ,for purposes of this part1 the term taxable income means the excess of-- 7#a7 the sum of-- 7,a7 wages 7as defined in section #caba7;a7 without regard to paragraph 7#a7 thereof7 which are paid in cash and which are received during the taxable year for services performed in the ,united ,states1 7,b7 retirement distributions which are includible in gross income for such taxable year1 plus 7,c7 amounts received under any law of the ,united ,states or of any ,state which is in the nature of unemployment compensation1 over 7#b7 the standard deduction4 7c7 ,standard deduction ,for purposes of this part-- 7#a7 ,in general ,the term standard deduction means the sum of-- 7,a7 the basic standard deduction1 plus 7,b7 the additional standard deduction4 7#b7 ,basic standard deduction ,for purposes of paragraph 7#a71 the basic standard deduction is-- 7,a7 #cb1dif in the case of-- 7i7 a joint return1 or 7ii7 a surviving spouse 7as defined in section #b7;a771 7,b7 #bj1gci in the case of a head of household 7as defined in section #b7;b771 and 7,c7 #af1bdh in the case of an individual-- 7i7 who is not married and who is not a surviving spouse or head of household1 or 7ii7 who is a married individual filing a separate return4 7#c7 ,additional standard deduction ,for purposes of paragraph 7#a71 the additional standard deduction is #f1iih for each dependent 7as defined in section #aeb7 who is a qualifying child 7as defined in section #aeb7;c77#a77 for the taxable year and who is not required to file a return for such taxable year4 7d7 ,retirement distributions ,for purposes of this section1 the term retirement distribution means any distribution from-- 7#a7 a plan described in section #dja7;a7 which includes a trust exempt from tax under section #eja7;a71 7#b7 an annuity plan described in section #djc7;a71 7#c7 an annuity contract described in section #djc7;b71 7#d7 an individual retirement account described in section #djh7;a71 7#e7 an individual retirement annuity described in section #djh7;b71 7#f7 an eligible deferred compensation plan 7as defined in section #deg71 7#g7 a governmental plan 7as defined in section #dad7;d771 or 7#h7 a trust described in section #eja7;c77#ah74 ,such term includes any plan1 contract1 account1 annuity1 or trust which1 at any time1 has been determined by the ,secretary to be such a plan1 contract1 account1 annuity1 or trust4 7e7 ,income of certain children ,for purposes of this part-- 7#a7 an individual's taxable income shall include the taxable income of each dependent child of such individual who has not attained age #ad as of the close of such taxable year1 and 7#b7 such dependent child shall have no liability for tax imposed by this section with respect to such income and shall not be required to file a return for such taxable year4 7f7 ,inflation adjustment 7#a7 ,in general ,in the case of any taxable year beginning in a calendar year after #bjah1 each dollar amount contained in subsection 7c7 shall be increased by an amount determined by the ,secretary to be equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost-of-living adjustment for such calendar year4 7#b7 ,cost-of-living adjustment ,for purposes of paragraph 7#a71 the cost-of-living adjustment for any calendar year is the percentage 7if any7 by which-- 7,a7 the ,,cpi for the preceding calendar year1 exceeds 7,b7 the ,,cpi for the calendar year #bjag4 7#c7 ,,cpi for any calendar year ,for purposes of paragraph 7#b71 the ,,cpi for any calendar year is the average of the ,consumer ,price ,index as of the close of the #ab-month period ending on ,august #ca of such calendar year4 7#d7 ,consumer ,price ,index ,for purposes of paragraph 7#c71 the term ,consumer ,price ,index means the last ,consumer ,price ,index for all urban consumers published by the ,department of ,labor4 ,for purposes of the preceding sentence1 the revision of the ,consumer ,price ,index which is most consistent with the ,consumer ,price ,index for calendar year #aihf shall be used4 7#e7 ,rounding ,if any increase determined under paragraph 7#a7 is not a multiple of #aj1 such increase shall be rounded to the next highest multiple of #aj4 7g7 ,marital status ,for purposes of this section1 marital status shall be determined under section #ggjc4 #fj;,b4 ,tax imposed on business activities 7a7 ,tax imposed ,there is hereby imposed on every person engaged in a business activity who makes an election to be taxed under this part a tax equal to-- 7#a7 #ai percent of the business taxable income of such person for such taxable year in the case of the first #b taxable years of the person beginning with the taxable year for which the election is made1 and 7#b7 #ag percent of the business taxable income of such person for such taxable year in the case of all taxable years subsequent to the taxable years described in paragraph 7#a74 7b7 ,liability for tax ,the tax imposed by this section shall be paid by the person engaged in the business activity1 whether such person is an individual1 partnership1 corporation1 or otherwise4 7c7 ,business taxable income ,for purposes of this section-- 7#a7 ,in general ,the term business taxable income means gross active income reduced by the deductions specified in subsection 7d74 7#b7 ,gross active income 7,a7 ,in general ,for purposes of paragraph 7#a71 the term gross active income means gross receipts from-- 7i7 the sale or exchange of property or services in the ,united ,states by any person in connection with a business activity1 and 7ii7 the export of property or services from the ,united ,states in connection with a business activity4 7,b7 ,exchanges ,for purposes of this section1 the amount treated as gross receipts from the exchange of property or services is the fair market value of the property or services received1 plus any money received4 7,c7 ,coordination with special rules for financial services1 etc ,except as provided in subsection 7e7-- 7i7 the term property does not include money or any financial instrument1 and 7ii7 the term services does not include financial services4 7#c7 ,exemption from tax for activities of governmental entities and tax-exempt organizations ,for purposes of this section1 the term business activity does not include any activity of a governmental entity or of any other organization which is exempt from tax under this chapter4 7d7 ,deductions 7#a7 ,in general ,the deductions specified in this subsection are-- 7,a7 the cost of business inputs for the business activity1 7,b7 wages 7as defined in section #caba7;a7 without regard to paragraph 7#a7 thereof7 which are paid in cash for services performed in the ,united ,states as an employee1 and 7,c7 retirement contributions to or under any plan or arrangement which makes retirement distributions 7as defined in section #fj;,a7d77 for the benefit of such employees to the extent such contributions are allowed as a deduction under section #djd4 7#b7 ,business inputs 7,a7 ,in general ,for purposes of paragraph 7#a71 the term cost of business inputs means-- 7i7 the amount paid for property sold or used in connection with a business activity1 7ii7 the amount paid for services 7other than for the services of employees1 including fringe benefits paid by reason of such services7 in connection with a business activity1 and 7iii7 any excise tax1 sales tax1 customs duty1 or other separately stated levy imposed by a ,federal1 ,state1 or local government on the purchase of property or services which are for use in connection with a business activity4 ,such term shall not include any tax imposed by chapter #b or #ba4 7,b7 ,exceptions ,such term shall not include-- 7i7 items described in subparagraphs 7,b7 and 7,c7 of paragraph 7#a71 and 7ii7 items for personal use not in connection with any business activity4 7,c7 ,exchanges ,for purposes of this section1 the amount treated as paid in connection with the exchange of property or services is the fair market value of the property or services exchanged1 plus any money paid4 7e7 ,special rules for financial intermediation service activities ,in the case of the business activity of providing financial intermediation services1 the taxable income from such activity shall be equal to the value of the intermediation services provided in such activity4 7f7 ,exception for services performed as employee ,for purposes of this section1 the term business activity does not include the performance of services by an employee for the employee's employer4 7g7 ,carryover of credit-,equivalent of excess deductions 7#a7 ,in general ,if the aggregate deductions for any taxable year exceed the gross active income for such taxable year1 the credit-equivalent of such excess shall be allowed as a credit against the tax imposed by this section for the following taxable year4 7#b7 ,credit-equivalent of excess deductions ,for purposes of paragraph 7#a71 the credit-equivalent of the excess described in paragraph 7#a7 for any taxable year is an amount equal to-- 7,a7 the sum of-- 7i7 such excess1 plus 7ii7 the product of such excess and the #c-month ,treasury rate for the last month of such taxable year1 multiplied by 7,b7 the rate of the tax imposed by subsection 7a7 for such taxable year4 7#c7 ,carryover of unused credit ,if the credit allowable for any taxable year by reason of this subsection exceeds the tax imposed by this section for such year1 then 7in lieu of treating such excess as an overpayment7 the sum of-- 7,a7 such excess1 plus 7,b7 the product of such excess and the #c-month ,treasury rate for the last month of such taxable year1 shall be allowed as a credit against the tax imposed by this section for the following taxable year4 7#d7 #c-month ,treasury rate ,for purposes of this subsection1 the #c-month ,treasury rate is the rate determined by the ,secretary based on the average market yield 7during any #a-month period selected by the ,secretary and ending in the calendar month in which the determination is made7 on outstanding marketable obligations of the ,united ,states with remaining periods to maturity of #c months or less4 #fj;,c4 ,tax on noncash compensation provided to employees not engaged in business activity 7a7 ,imposition of tax ,there is hereby imposed on every employer of an employee to whom this section applies and who makes an election to be taxed under this part a tax equal to-- 7#a7 #ai percent of the value of excludable compensation provided during the calendar year by the employer for the benefit of employees to whom this section applies in the case of the first #b calendar years beginning with the calendar year for which the election under section #fj is made1 and 7#b7 #ag percent of such excludable compensation during the calendar year in the case of all calendar years subsequent to the calendar years described in paragraph 7#a74 7b7 ,liability for tax ,the tax imposed by this section shall be paid by the employer4 7c7 ,excludable compensation ,for purposes of subsection 7a71 the term excludable compensation means any remuneration for services performed as an employee other than-- 7#a7 wages 7as defined in section #caba7;a7 without regard to paragraph 7#a7 thereof7 which are paid in cash1 7#b7 remuneration for services performed outside the ,united ,states1 and 7#c7 retirement contributions to or under any plan or arrangement which makes retirement distributions 7as defined in section #fj;,a7d774 7d7 ,employees to whom section applies ,this section shall apply to an employee who is employed in any activity by-- 7#a7 any organization which is exempt from taxation under this chapter1 or 7#b7 any agency or instrumentality of the ,united ,states1 any ,state or political subdivision of a ,state1 or the ,district of ,columbia4 4 7b7 ,clerical amendment ,the table of parts for subchapter ,a of chapter #a of such ,code is amended by adding at the end the following new item3 ,part ,,viii4 ,the ,flat ,tax 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjah4 #c4 ,repeal of estate and gift taxes 7a7 ,in general ,subtitle ,b of the ,internal ,revenue ,code of #aihf is hereby repealed4 7b7 ,effective date ,the repeal made by subsection 7a7 shall apply to the estates of decedents dying1 and gifts and generation-skipping transfers made1 after ,december #ca1 #bjah4 7c7 ,cross reference ,see section #ajb of the ,internal ,revenue ,code of #aihf for exclusion of gifts and inheritances from gross income4 #d4 ,supermajority required to consider revenue measure ,a bill1 joint resolution1 amendment to a bill or joint resolution1 or conference report that-- 7#a7 includes an increase in the rates of tax specified in section #fj;,a7a7 or #fj;,b7a7 of the ,internal ,revenue ,code of #aihf 7as amended by this ,act71 or 7#b7 reduces the standard deduction1 as defined in section #fj;,a7c7 of such ,code 7as so amended71 or the deductions specified in section #fj;,b7d7 of such ,code 7as so amended71 may not be considered as passed or agreed to by the ,house of ,representatives or the ,senate unless so determined by a vote of not less than two-thirds of the ,members of the ,house of ,representatives or the ,senate 7as the case may be7 voting1 a quorum being present4