This bill would give individuals and businesses the choice to irrevocably opt out of the current income tax structure and instead pay a flat tax of 19 percent for the first two years, and 17 percent annually thereafter. To increase the rate of the flat tax or reduce the value of deductions, a two-thirds vote by both chambers of Congress would be required. Additionally, this bill would repeal the estate, gift, and generation-skipping transfer taxes.
The tax would be calculated by subtracting from gross income a basic standard deduction for the filing individual and additional standard deduction(s) for their dependants. For businesses it would be a similar process, with deductions for business inputs, wages, and retirement contributions taken into account.