PRI Introduces a 3% Flat Income Tax Rate Plan for Californians
SACRAMENTO, MAY 6, 2008 – The Pacific Research Institute (PRI), a free-market think tank based in California, today released the results of a study to determine a revenue-neutral flat income tax rate for California. The report found that a 3 percent flat income tax for all Californians would help smooth the revenue rollercoaster from economic booms and busts – a factor that is largely responsible for California’s budget deficit, which could grow to $20 billion in the next fiscal year, according to Governor Arnold Schwarzenegger.
“The PRI flat income tax plan for California will help avoid future budget crises, simplify the tax code, and would become an engine of economic growth,” said Robert P. Murphy, Ph.D., senior fellow in Business and Economic Studies and author of the new PRI study, Ending the Revenue Rollercoaster: The Benefits of a Three Percent Flat Income Tax for California. Most important, a flat tax would allow average taxpayers to complete their tax returns in minutes by filing their returns on a postcard. “Californians will no longer have to bother with saving receipts, searching for eligible credits, or suffer from sleepless nights worrying over the legitimacy of their tax deductions,” said Dr. Murphy.
The PRI 3 percent flat income tax rate plan offers the following advantages:
- Provides a more stable flow of revenue, helping to avoid future budget crises
- Completely eliminates the stealth alternative minimum tax, as well as the estate, inheritance, and gift taxes
- Revamps the convoluted, loophole-ridden corporate and personal income-tax codes with a simple flat rate of 3 percent on personal and corporate net income
- Eliminates the millionaires’ surcharge of 1 percent
- Eliminates the double taxation of corporate dividend payments
“Contrary to popular myth, a flat income tax is not a handout to the rich,” said Dr. Lawrence J. McQuillan, PRI director of Business and Economic Studies and director of the flat tax project. “In budget emergencies, such as the one we have now, it isn’t the rich, but the poor, who suffer the most when the state must slash payrolls and public programs. Under the PRI flat tax plan, California’s economy would grow, creating thousands of jobs, and revenues would be more stable. A 3 percent flat tax rate is good for government, good for business, and great for California taxpayers at all income levels.”
Steve Forbes, editor-in-chief of Forbes magazine and author of Flat Tax Revolution, said, “A 3 percent flat tax would trigger the biggest boom in California since the Gold Rush!”