Trump’s Tax Cuts Were Good. A Flat Tax Would Be Better

Congress should scrap itemized deductions and enact a flat personal and corporate rate of 15%.

By Steve Forbes and Stephen Moore. Excerpts:

"The simplicity of a flat tax would reduce the deadweight costs associated with tax compliance—and the headaches. The White House Office of Information and Regulatory Affairs calculates that Americans spent almost eight billion hours filling out tax forms in 2024. The Tax Foundation estimates that this cost the economy $413 billion in lost productivity, and the Internal Revenue Service estimates that we spent $133 billion on out-of-pocket compliance costs. That adds up to a burden of $546 billion.

Donald Trump’s 2017 reforms already simplified tax filing by doubling the standard deduction from $12,500 to $25,000 for married couples filing jointly. Prior to 2017, almost 40% of tax filers itemized deductions on their tax returns. Today, only 9% do. Almost all low- and middle-income tax filers now check the box for the standard deduction."

"Then there is the state and local tax deduction, or SALT, which effectively allows higher-income Americans to deduct more than lower-income taxpayers. The TCJA capped this deduction at $10,000. The Tax Foundation calculates that eliminating this deduction would raise $2 trillion over 10 years. Almost all of that revenue would come from the wealthiest Americans, who would still come out ahead thanks to the lowered tax rate."

"The deduction encourages states and cities to raise their taxes, which chases out businesses and workers."

" In the 1980s, charities feared that donations would decline when the top income-tax rate went from 70% to 28%. Instead, giving reached record levels."

But almost all the revenue loss to the Treasury comes from the tax returns of millionaires and billionaires. In other words, the most regressive feature of our tax code is the availability of special deductions and loopholes. When no one is getting any special-interest breaks, a progressive tax rate won’t be needed to make sure the super-rich pay their “fair share.”"