Shelby reintroduces flat tax proposal despite slim chance of passage

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WASHINGTON (Gray DC) - A tradition that happens every Congress, Senator Richard Shelby (R-AL) is reintroducing legislation to establish a flat tax.

Senator Shelby (R-AL) is reintroducing the flat tax in part to simplify the federal tax process. (Source: Gray DC)

"You should not penalize people who do well," said Shelby. "We tax people to death that comes out of the socialist agenda. That's not the way you create wealth and jobs in America."

For 36 years in the Senate Shelby has been trying, and failing, to pass the flat tax. He says simplicity is the name of the game as it calls for a 17 percent tax on the income of all individuals, whether you make $15 thousand a year or $1 million. His plan calls for tax exemptions up to almost $15 thousand for individuals, $29 thousand for married couples and other breaks for heads of households and dependents.

"It would stimulate investment, stimulate savings," said Shelby.

Shelby says he recognizes this proposal might not gain traction in this Congress either. The liberal leaning Economic Policy Institute (EPI) says it should not.

"It's more fair that the more money you make the more you pay in taxes and the flat tax does away with that principle," said Josh Bivens, director of research at EPI.

Bivens says the U.S. has an unequal economy that is growing even more unequal. He says the simplicity and economic stimulus arguments that come with a flat tax are not strong.

"A lot of economic circumstance in life is dictated by luck and we want to help those who came up sort of on the wrong side of the roll of dice and ask more of people who got a little luckier," said Bivens.

Shelby's legislation is sitting in a Senate Committee awaiting a decision.

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