Flat Tax Act

HR 1040, the Flat Tax Act, establishes a simplified tax system where individuals and businesses can choose to replace the current progressive income tax with a flat rate. For individuals, it imposes a 19% tax on taxable income (first two years) or 17% thereafter, calculated as cash wages, retirement distributions, and unemployment benefits minus a standard deduction (e.g., $32,496 for joint filers). Businesses face a similar 19%/17% tax on "business taxable income" (gross receipts minus specific deductions like wages and business inputs), while repealing estate and gift taxes. The bill requires a two-thirds supermajority in Congress to pass future tax increases or cuts to deductions. It applies to taxpayers who elect into this system, not the general population.