For individuals: Wyden-Coats reduces the number of individual tax brackets from the current six to three: 15 percent, 25 percent, and 35 percent and eliminates the Alternative Minimum Tax completely. According to the Tax Policy Center, most (not all) families making up to $200,000 a year will pay the same or less in taxes under Wyden-Coats than they do today.
For businesses: Wyden-Coats also makes American companies more competitive by reducing the top corporate tax rate and replacing the existing six corporate rates and eight brackets with a single flat rate of 24 percent. But, reducing the corporate tax rate does not help small businesses which are the largest employer in the country representing 53% of US workers. “A corporation is a legal entity that is created under the laws of a state designed to establish the entity as a separate legal entity having its own privileges and liabilities distinct from those of its members.” Most small businesses do not fit the aforementioned description of a corporation. Small businesses fit the individual description. A small business owner may decide not to grow their business to avoid making more than $200,000 a year causing fewer employees to be hired. This could prove to be detrimental to the growth of the US economy. The 30 million small businesses in the US account for 64% of net new jobs (jobs created minus jobs lost). 70% of jobs created in the last decade were by small business. The economy of 1986 is not the same as the economy of 2011. The proposed Act appears outdated. Big corporations are not going to bring manufacturing jobs back to America because countries such as China can produce most of the tangible consumer goods for a lower cost than producing the same goods in the US. Outsourcing manufacturing jobs increases the corporation’s profits. Small businesses need a break they are the ones that keep the US economy going. Instead tax laws punish them.
Why can’t Congress enact a flat tax for all US citizens? A flat tax would allow Americans to have more disposable income to purchase consumer goods and small businesses could flourish without fear of tax hikes. The total of collections before refunds for fiscal year 2007 was 2,691,538,000,000 (I cannot find records of 2010). If every American 15 and over was taxed 16% without refunds and deductions the IRS would collect 2,812,901,637,135.42 which is actually more than they collected in 2007.
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