One of the possibilities missing from 2024 financial services universe predictions may be the return of the flat tax debate.
Some states have flat, or flattish, state income taxes. Even Massachusetts has a rate that's a flat 5% from $8,000 in income up to $1 million.
Steve Forbes has long been famous for calling for Congress to convert the federal government to a flat tax system. Now he's making news for proposing that Donald Trump put a 17% flat income tax rate in his platform.
What could the return of the flat tax proposal mean, other than the possibility that 1980s shoulder pads could be about to explode out of the walls?
Here are seven ideas for agents and advisors to consider.
1. Rep. Michael Burgess could tell everyone he told us so.
The Texas Republican has introduced a flat tax bill every Congress since he's been in office.
When he can slot it in as H.R. 1040 — a nod to the tax form — he does that, and that's what it is in the current Congress.
2. A federal flat tax could wipe out some favorite retirement planning tools.
Many of retirement planners' favorite retirement tax incentives cost the federal government a lot of tax revenue.
The latest house White House Office of Management and Budget Analytical Perspectives report shows, for example, that 401(k) plans will create a $152 billion "tax expenditure" this year.
Defined benefit employer pension plans will cost $69 million, self-employed plans will cost $44 billion and individual retirement accounts will cost $33 billion.
Economists who strongly oppose federal government use of tax incentives to influence behavior contend that everyone would be better off if the government simply let people keep the $298 billion that will go toward major retirement tax incentives this year.
Economists who are worried about income inequality contend that too much of the incentive value goes to relatively high-income people who don't need it.
