The first would curb runaway spending through a Balanced Budget Amendment to the U.S. Constitution that would ensure that the federal government does not spend more money than it takes in each year. The second would drastically simplify the tax code, reduce Americans’ tax burden, eliminate corporate welfare, and boost American competitiveness by establishing a flat income tax rate of 17 percent on all income. Shelby has consistently advocated for both proposals since his election to the Senate in 1986. He issued the following statement regarding the legislative package:
“We spend too much. We borrow too much. We tax too much. We need straightforward solutions to these clear problems.
Instead of lurching from crisis to crisis and fixing nothing, we should carefully weigh and enact measures that will establish fiscal sanity, spark economic growth, and foster job creation.
In my judgment, these proposals will revive our economy by reducing government spending and creating an environment conducive to private sector growth.”
Shelby was one of only eight senators to oppose legislation on January 1, 2013, to avert the so-called fiscal cliff. To view his statement following that vote, click here.
Background information on the proposals is below. Legislative text of the proposals is attached.
Overview of Balanced Budget Amendment to the U.S. Constitution:
Our nation’s debt has increased from $10.6 trillion at the start of President Obama’s first term to $16.4 trillion today -- an increase greater than any other president in our nation’s history. The annual budget deficit is nearly seven times the amount it was five years ago ($1.1 trillion in 2012 versus $161 billion in 2007).
This legislation proposes an amendment to the U.S. Constitution to prohibit the federal government from spending more money than it takes in each year. It would also place a cap on spending by not allowing the federal government to spend an amount greater than 20 percent of our nation’s gross domestic product in any given year. The proposed amendment would allow the requirements to be waived if a war has been declared by Congress under Article I Section 8 of the Constitution or if three-fifths of both houses of Congress vote to suspend the requirement in other times of emergency.
Overview of Flat Tax Legislation:
The Simplified, Manageable And Responsible Tax (SMART) Act establishes a flat income tax rate of 17 percent on all income. The only exemptions would be personal exemptions of:
• $14,070 for a single person;
• $17,970 for a head of household;
• $28,140 for a married couple filing jointly; and
• $6,070 for each dependent
These allowances would also be indexed to the consumer price index in order to prevent inflation from raising Americans’ tax burden. To prevent the double-taxation of income, earnings from savings would not be included as taxable income, resulting in an immediate tax cut for virtually all taxpayers.
With the SMART Act in place, taxpayers would file a return the size of a postcard. There would be no more long hours spent poring over convoluted IRS forms and no more fees paid for professional tax assistance.
Under the SMART Act, businesses would pay the same 17 percent rate on a positive difference between revenue and expenses, allowing businesses to redirect resources away from tax compliance and toward expansion and job creation.
By closing loopholes for individuals and businesses, the SMART Act would create broad-based lower tax rates that would give American individuals and businesses a competitive edge, create and retain jobs in the United States, and curb offshoring.