A Flat Tax in 2025

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

- Steve Forbes And Stephen Moore

Making the Tax Cuts and Jobs Act permanent would be a good start for Congress in 2025.

But it's time to take an even bigger step: creating a simplified flat tax for all. The TCJA got us close to this goal, and a few additional reforms would get it done.

Collapsing the personal-income and corporate tax rates to 15% would have huge economic benefits. America would suddenly have one of the lowest tax rates in the world, resulting in trillions of dollars of new capital flow and a spike in take-home pay.

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.