Fair Flat Tax Act of 2006

The Fair Flat Tax Act of 2006 proposed a significant overhaul of the federal tax code by consolidating individual income tax brackets into three tiers (15%, 25%, and 35%) and establishing a flat 35% tax rate for corporations. To simplify the filing process, the bill sought to repeal the Alternative Minimum Tax (AMT) and eliminate various specialized deductions and credits in favor of a larger standard deduction and a simplified tax credit for families with children.

For the average citizen, these changes would have meant higher taxes on investment income, as the bill proposed ending preferential rates for capital gains and dividends. However, it also introduced new benefits for middle-income households, including a tax credit for higher education expenses and a new deduction for home mortgage interest available even to those who do not itemize their taxes. Additionally, the bill aimed to encourage retirement savings by allowing deductions for contributions to "universal pension accounts."