Pulled this off the web.
Description of Various "Flat Tax" Proposals
CTJ, November 1, 1998
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The "flat tax" was first proposed by two Stanford economists, Robert Hall and Alvin Rabushka, in their 1983 book "Low Tax, Simple Tax, Flat Tax." The Hall-Rabushka plan, on which the Armey-Shelby bill is based, would replace the current personal income and corporate income tax structure with a two-level tax designed to tax all income exactly once, and at the same rate (in H-R's version, 19 percent). A number of so-called "flat tax" plans have been proposed by various prominent Republicans to replace the current federal personal income tax and the corporate income tax. The prototype proposal was put forward by House Majority Leader Richard Armey (R-Tex.), and has been sketchily drafted into actual legislation sponsored by Armey and Sen. Richard Shelby (R-Ala.) Introduced as legislation in 1994 and reintroduced in 1995, the Armey-Shelby bill was last revised in March of 1997.
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The Armey plan
Among the key elements of the Armey plan are:
Individuals would report only wages and pensions on their individual tax forms. Small business owners would pay themselves a salary so they could file an individual tax form (along with a business tax form) to take advantage of the proposed exemptions from the wage tax.
Income from interest, dividends and capital gains would not be reported on any form.
All individual itemized deductions and credits would be eliminated. Thus, there would be no deductions for mortgage interest, state and local taxes, charitable contributions or extraordinary medical expenses; no credit for child-care expenses; and no earned-income tax credit for low- and moderate-income working families.
Most adult taxpayers would be allowed a personal exemption of $11,000 each (two exemptions for couples), except that unmarried parents would get a $14,400 exemption each. There would be an additional deduction of $5,000 per child.
The flat tax would also apply (without exemptions) to employer-paid fringe benefits, defined to include employer-paid health insurance, certain other fringe benefits and the social security taxes (7.65% of wages up to $63,700) that employers pay on their employees' behalf. The new fringe benefits tax would be collected from all employers, including state and local governments and non-profit organizations. There is general agreement that its burden would fall on workers in the form of reduced benefits and/or cash wages.
Businesses would file tax forms similar to the current forms, except that (a) all capital investments and inventory purchases would be deductible immediately, rather than depreciated or deducted when goods are sold; (b) business income from dividends and capital gains would not be reported; (c) interest income would not be included in income and interest expenses would not be deductible; and (d) outlays for tickets to sporting events, country club memberships, skyboxes, business meals, etc. would be 100% deductible, rather than only 50% deductible (or completely non-deductible) as under current law.
The federal estate tax would be repealed.
There would be no transition rules from the old system to the new one. Thus, for example, businesses would lose unused depreciation deductions on previous purchases of machinery and buildings.
Rep. Armey proposes a 20% tax rate in 1997 and 1998, dropping to 17% starting in 1999.
According to both Armey and the Treasury Department, at the proposed 20% rate and assuming no transition rules and no changes in taxpayer behavior to avoid the new tax, Armey's plan would lose at least $30 billion a year in tax revenues. At Armey's promised 17% rate, Treasury says the plan would add $138 billion to the annual budget deficit (in 1996 dollars).
According to the Treasury Department, at what Treasury says is a break even rate of 20.82% (or for that matter, at Armey's proposed 20% rate), the Armey plan would increase taxes sharply on all income groups except those earning more than $200,000 a year. (Others believe that the break-even rate would have to be considerably higher than Treasury finds.)
This is but one proposed form, and I'm sure there are others, all in all, anything would be better than what we have now, which is if you make enough you don't pay, and if you don't make enough you don't pay, where does this leave the middle income, wage earners.
Let me try one more time this way: I 
