A flat income tax for individuals will be simpler and more fair, will provide a significant tax cut and will prevent future tax increases. That may be wonderful for individuals, but what impact will all this have on business?
 
  The answer: an enormous impact, all of which is positive.
 
  Businesses exist because people buy things from them. People buy things with after-tax dollars. Cutting taxes and preventing future tax increases will allow people to keep more of their money. There are only two things you can do with money: spend it and save it. If the money is spent, businesses will be better off because their revenues will increase. If the money is saved, businesses will be better off because the supply of capital used to finance their growth and expansion will increase.
 
  Assume that the tax cut that results from implementing the flat tax reduces overall individual income taxes by $125 billion per year. While this is a staggering sum, it represents only 7.6 percent of this year's proposed $1.64 trillion federal budget.
 
  With approximately 250 million people living in the United States, this tax cut translates to $500 per person, or $2,000 for each family of four. While this may not seem like a significant amount to some people, it is significant to many others. Moreover, the tax cuts embedded in this flat tax are highly skewed to those individuals who need the money the most: families of four earning less than $34,000 per year.
 
  This tax cut is not a one-time event; it is designed to be permanent. This means that an additional $125 billion per year, every year from now on, instead of going to the government, will flow into businesses, savings accounts, stocks, bonds and mutual funds.
 
The simplification aspect of the flat tax provides yet another tangible benefit. Joel Slemrod, an economist at the University of Michigan, has estimated that the cost of complying with our current tax system is at least $75 billion per year. With the flat tax, virtually all of these costs would disappear, freeing up an additional $75 billion every year, which taxpayers could use more wisely to buy things they need or save for their future.
 
  Government very often becomes involved in inefficient or unproductive tasks. Why? Because it can. How? Because it wields the awesome power to levy taxes.
 
  Capital flows to its highest and best use; businesses clamor for capital with the promise of using it to its highest economic benefit. But the government can step in, through its power of taxation, and take that capital for political benefit, regardless of economic benefit. While a business attempts to create value with the capital it employs, government often ends up destroying capital.
 
  When was the last time you were directly (and positively) affected by the U.S. Department of Energy? How about the U.S. Department of Education? The U.S. Department of Commerce? Look at the billions of dollars poured into these agencies every year. Where is the benefit from these dollars? I don't know, but here is an example of some of the costs.