SMART Act

Simplified, Manageable, And Responsible Tax Act or the SMART Act

This bill amends the Internal Revenue Code to replace the marginal income tax rates with a single rate of 17% on individual taxable income.

The bill redefines "taxable income" to mean the amount by which wages, retirement distributions, and unemployment compensation exceed the standard deduction. It also:

• increases the basic standard deduction,
• includes an additional standard deduction for dependents, and
• includes the taxable income of each dependent child under the age of 14 in an individual's taxable income.

The bill revises the tax on corporations to: (1) replace it with a tax on every person engaged in a business activity equal to 17% of the business taxable income of such person; and (2) make the person engaged in the business activity liable for the tax, whether or not such person is an individual, a partnership, or a corporation.

The bill imposes on employers a 17% tax on the value of excludable compensation provided during the year to employees.

With respect to pension rules, the bill: (1) repeals rules relating to non-discrimination, contribution limits, and restrictions on distributions; and (2) revises rules relating to transfers of excess pension assets.

The bill also repeals:

• the alternative minimum tax;
• all income tax credits;
• estate, gift, and generation-skipping transfer taxes; and
• income tax provisions, except certain provisions relating to retirement distributions and tax-exempt organizations.

The bill prohibits Congress from considering legislation to make specified changes to tax policy unless Congress waives or suspends the prohibition with a three-fifths vote.

Written by the nonpartisan Congressional Research Service. All summary versions on Congress.gov