S 893 — SMART Act

Summary

Simplified, Manageable, And Responsible Tax Act or the SMART Act This bill amends the Internal Revenue Code to replace the marginal income tax rates with a single rate of 17% on individual taxable income. The bill redefines "taxable income" to mean the amount by which wages, retirement distributions, and unemployment compensation exceed the standard deduction. It also: increases the basic standard deduction, includes an additional standard deduction for dependents, and includes the taxable income of each dependent child under the age of 14 in an individual's taxable income. The bill revises the tax on corporations to: (1) replace it with a tax on every person engaged in a business activity equal to 17% of the business taxable income of such person; and (2) make the person engaged in the business activity liable for the tax, whether or not such person is an individual, a partnership, or a corporation. The bill imposes on employers a 17% tax on the value of excludable compensation provided during the year to employees. With respect to pension rules, the bill: (1) repeals rules relating to non-discrimination, contribution limits, and restrictions on distributions; and (2) revises rules relating to transfers of excess pension assets. The bill also repeals: the alternative minimum tax; all income tax credits; estate, gift, and generation-skipping transfer taxes; and income tax provisions, except certain provisions relating to retirement distributions and tax-exempt organizations. The bill prohibits Congress from considering legislation to make specified changes to tax policy unless Congress waives or suspends the prohibition with a three-fifths vote.

Bill Text

• Introduced Introduced in Senate Current html April 07, 2017

AI-generated reading aid from the bill's amendatory text — verify against the official bill.

The bill proposes to repeal the existing Internal Revenue Code and replace it with a flat tax structure at a rate of 17% for both individual and business incomes.

• Section 1 of the Internal Revenue Code of 1986

  the tax imposed by chapter 1 on the taxable income of every individual shall be as follows: → There is hereby imposed on the taxable income of every individual a tax equal to 17 percent of the taxable income of such individual for such taxable year.

  This change establishes a flat tax rate of 17% on individual taxable income.

• Section 63 of the Internal Revenue Code of 1986

  The term 'taxable income' means the amount of gross income minus deductions allowed → For purposes of this subtitle, the term 'taxable income' means the excess of…

  This redefinition alters how taxable income is calculated, combining various income sources while adjusting for the standard deduction.

• Section 11 of the Internal Revenue Code of 1986

  There is hereby imposed on the taxable income of each corporation, a tax determined by the tables of rates provided in this chapter. → There is hereby imposed on every person engaged in a business activity a tax equal to 17 percent of the business taxable income of such person.

  This change establishes a flat tax rate of 17% on business taxable income, impacting how corporate taxes are levied.

• Section 63(a) and (b) of the Internal Revenue Code of 1986

  For purposes of this subtitle, the term 'standard deduction' means... → the term 'standard deduction' means the sum of...

  This modification defines the standard deduction structure, delineating basic and additional deductions for various filing statuses.

• Section 102 of the Internal Revenue Code of 1986

  The tax imposed by this section shall be paid by the person engaged in the business activity, whether such person is an individual, partnership, corporation, or otherwise.

  This clarifies that the flat business tax is applicable to all types of business entities, not just corporations.

• Section 63(c) of the Internal Revenue Code of 1986

  The term 'retirement distribution' means any distribution from... → For purposes of subsection (a), the term 'retirement distribution' means any distribution from...

  This amendment provides a comprehensive definition of retirement distributions for tax calculations.

• Section 1 of the Internal Revenue Code of 1986

  The tax rate imposed under this section for any taxable year shall be 17%.

  The bill establishes a permanent flat tax rate for individuals, simplifying prior tax brackets.

• Section 11 of the Internal Revenue Code of 1986

  ''Business taxable income'' means gross active income reduced by the deductions specified in subsection (d).

  This introduces a new definition of business taxable income, aligning it with the flat tax structure.

• Section 1 of the Internal Revenue Code of 1986

  For purposes of this subtitle, marital status shall be determined under section 7703.

  This change reinforces the determination of marital status for tax purposes, aligning with existing definitions.

• Section 63 of the Internal Revenue Code of 1986

  For purposes of paragraph (1), the additional standard deduction is $6,290 for each dependent (as defined in section 152)...

  The bill provides a specific amount for additional deductions based on dependents, affecting overall taxable income.

Action History

1. April 07, 2017

   Introduced in Senate

2. April 07, 2017

   Read twice and referred to the Committee on Finance.

Sponsors

• Richard C. Shelby · Primary

Subjects