![]() The taxable income for the purposes of the flat business income tax is determined by using the net profits as determined on federal corporate tax returns after elimination of interest, dividend and capital gains income that are included in those returns. The amount of the deductions are determined by the individual state. In addition, a deduction for dependents is also allowed. ![]() ![]() A generous personal deduction is allowed based on filing status. Personal income does not include income from capital gains, interest, dividend income or social security and other government benefits. In this model, personal taxable income includes income from the following: wages, salary, pensions, and income derived from the individual’s operation of a business or as a partner in a business, or as an independent contractor as determined on federal income tax forms 1040C and 1040F after elimination of interest and dividend income. A revenue cap is also imposed to deter excessive government spending. The personal or business tax rate may not be increased except when 2/3’s supermajority of the legislators in each House of the legislature vote to increase the rate. In this legislation, the single, flat-rate is determined by each individual state. ![]() Currently, fourteen states have either a 0 percent tax on income or a flat rate tax on income. Though the ultimate flat tax on income is 0 percent or no income tax at all, if an income tax is imposed, a flat rate system is much preferable to a progressive rate structure. This Act establishes a single, flat-rate tax on personal and business income. ![]()
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