Tuesday, July 26, 2011

Tax Reform

A truly flat tax
We replace today's complex mosaic of tax rates with a single rate for all. The current payroll tax that funds Medicare and Social Security is folded into that rate. This reduces the government's take to no more than 18.5 percent of the economy.

A truly simple tax system

Under the Heritage plan, you're taxed only once and only on income that you spend on consumer goods and services. Money that you save is not taxed until you spend it. And throughout your working years, you get a tax credit for health insurance.

Protection for low-income working households

No more payroll tax (for Social Security and Medicare) that hits low-income workers hardest. A health insurance tax credit protects against excessive taxes. And the Earned Income Tax Credit is preserved to help families with low incomes.

Security for low-income seniors

Unlike today's system, our plan includes a substantial exclusion to ensure that low-income retirees pay no taxes on Social Security benefits. Low-income seniors who work beyond retirement age pay no tax on the first $10,000 in earnings.

Business taxes that encourage investment and fuelgrowth

Our plan substantially reduces business tax rates to encourage private investment and make businesses more competitive. Businesses are taxed only on domestic income. Our plan repeals the estate tax so heirs of family businesses can continue to operate.

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