The nightmare on Main Street — the federal income tax code — is ending, which is fantastic news for our beleaguered economy. Dramatically simplifying this monstrosity would unleash a powerful wave of prosperity and job creation.
Thankfully in 2012 we will get a mandate to make this happen. Presidential contender Herman Cain vaulted to the head of the Republican pack when he proposed his 9-9-9 plan — a flat 9% income tax, corporate tax and national sales tax. Even better, Texas Gov. Rick Perry will, in a few days, unveil his version of a flat tax, a concept that I have long advocated.
The flat tax would junk the current code and replace it with a single rate that would apply to all incomes after generous deductions. There would be no tax on your savings and there would be no death tax — you should be allowed to leave the world unmolested by the IRS. The business profit tax would also be slashed — all those poisonous loopholes would be eliminated. You could do your tax return on a single sheet of paper. Under the plan I introduced in the 1990s, for instance, a family of four would have paid no federal income tax on their first $36,000 of income and only 17 cents on the dollar above that level.
The flat tax would stimulate risk taking and productivity. Combined with a stable dollar, it would usher in a great economic boom.
The Cain plan would rid us of not only the federal income tax, but also the Social Security and Medicare payroll taxes.
Both plans would end crony capitalism and reduce political corruption: Half of the lobbying in Washington revolves around the tax code as special interests vie for special tax breaks.