Social Security and Medicare payroll taxes are the second-largest source of federal revenue, surpassed only by personal income taxes. This week’s chart from Heritage’s 2011 Budget Chart Book depicts federal revenue by source.
That chart would look quite different if Heritage’s tax-reform plan were enacted into law. That plan, part of the Saving the American Dream proposal, prescribes a single, low rate for individuals, replacing all federal income taxes, payroll taxes, the death tax, and most excises.
The business tax code will also be replaced by a new flat business tax, thereby giving all businesses equal treatment and providing the framework for them to compete better in global markets.
This simplified system enables taxpayers to anticipate their tax burden and plan accordingly. The Heritage tax plan encourages economic growth through a lower rate and by removing multiple taxation on the same income. Because the plan taxes income spent on consumption, it eliminates the disincentives families currently face to build savings. Enacting the plan would result in greater economic freedom and opportunity, and it would encourage Americans to be proactive in building financial security for themselves and their families.
Tags: budget chart book, Chart of the Week, congress, income tax, payroll tax, Saving the American Dream, social security, tax reform, Robert Bluey, To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!
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