WASHINGTON – U.S. Senator Sam Brownback today chaired a hearing of the Appropriations Subcommittee on the District of Columbia to explore the idea of implementing an optional flat tax system for federally taxed income in the District of Columbia.

“I believe that a flat federal income tax would create more economic activity and jobs in the District, which would enhance the District’s ability to raise revenue while actually lowering its own high local taxes,” said Senator Brownback. “Our tax system should be fair, simple, and easy to understand. One way to make the system more fair is to have taxpayers pay taxes based on a single, flat rate which is applied to all taxpayers equally and which includes a generous personal exemption to protect low-income families.”

The flat tax plan would be a voluntary alternative to the current federal tax structure for District residents. The District’s local tax structure would not be altered by this plan.

Brownback continued, “Those who want to stay under the current system would be free to do so. I think, however, that if people are given a chance, they will abandon the current burdensome system. Each year, taxpayers in the District suffer like all Americans from the burden of our maddeningly complex tax code. This confusion is one reason why almost two-thirds of all taxpayers have given up trying to figure out how to complete their own tax returns and now simply pay someone else to sort it out.”

The committee discussed a flat tax rate that would only be applied to income earned above an exemption level based on family size. Such an exemption level could be somewhere between $5,000 and $7,000 for each member of the household. With this higher exemption level, a couple with two children earning $28,000 per year would pay no federal income tax at all.

Brownback continued, “A benefit of a flat tax is that it removes the double-taxation on money saved or invested. I do not think that dollars on which wage earners have already paid taxes should be taxed again when those dollars are saved or invested. This double-taxation creates a disincentive to saving and investing.”

The committee heard from Dick Armey, former Majority Leader of the House of Representatives; Daniel J. Mitchell, McKenna Senior Fellow in Political Economy at the Heritage Foundation; Stephen J. Entin, President and Executive Director of the Institute for Research on the Economics of Taxation; and Chris Edwards, Director of Tax Policy Studies at the Cato Institute.

Senator Brownback chairs the Appropriations Subcommittee on the District of Columbia.

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