Businesses would be allowed to fully expense capital investment, but would no longer be able to deduct interest expenses. Capital gains, dividends, and interest income would be tax-exempt at the individual level. The plan would tax all wage income and business income at 14.9 percent.

This plan would replace the current federal income tax (both individual and corporate) with a 14.9 percent Hall-Rabushka-style flat tax. Ben Carson released details of a tax reform plan.

Accounting for economic growth, all taxpayers would see an increase in after-tax income of at least 0.5 percent in the long term.

The top decile would see an increase in after-tax income of 16 percent and the top 1 percent would see an increase of 33 percent. The plan reduces the after-tax income of the bottom three income deciles by as much as 14.8 percent.

On a static basis, the plan would increase taxes on all income groups except the top 10 percent of taxpayers.

The plan would also lead to a 46.6 percent larger capital stock, 10.9 percent higher wages, and 5.2 million more full-time equivalent jobs.

According to the Tax Foundation’s Taxes and Growth Model, the plan would lead to a 16 percent higher GDP over the long term, provided that the tax cut could be appropriately financed. The plan would move to a consumption base, which would significantly reduce the cost of capital.The plan would also result in increased outlays, due to higher interest on the debt, creating a 10-year deficit somewhat larger than the estimates above.However, the plan would end up reducing revenues by $2.5 trillion over the next decade when accounting for economic growth, due to increases in the supply of labor and capital.

Carson’s plan would cut taxes by $5.6 trillion over the next decade on a static basis. Ben Carson’s tax plan would replace the federal income tax code with a modified Hall-Rabushka-style flat tax of 14.9 percent.

Flat tax plan