November 27, 2007 10:24AM 

# Two Tax Rates Catching On 

By [Chris Edwards](https://www.cato.org/people/chris-edwards) 

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A few years ago, I proposed a major overhaul of federal taxation with a plan I called the dual-rate income tax. (See [here](https://www.cato.org/pubs/tbb/tbb-0502-22.pdf) and [here](https://www.cato.org/pub_display.php?pub_id=3681)). The plan would get rid of virtually all credits and deductions, be favorable to savings and investment, and compress the current six-rate system down to two lower rates.

[I proposed the idea to the president’s tax reform panel in 2005](http://www.taxreformpanel.gov/meetings/meeting-05_11-12_2005.shtml), but the panel didn’t bite. Panel co-chair, former Senator John Breaux, said: “Chris, I looked at your plan; I don’t like it.”

But this year, the two-rate idea is catching on. House Republicans led by [Paul Ryan have proposed a two-rate plan called a Simplified Tax](https://www.cato.org/2007/10/11/real-tax-reform/). ([Please join us](https://www.cato.org/event.php?eventid=4253) to hear Mr. Ryan speak about his plan on December 6). And yesterday, presidential candidate [Fred Thompson included a two-rate plan in his platform](http://www.fred08.com/NewsRoom/InTheNews.aspx?ID=a1b516ae-e0e6-4fbb-90f4-a43916e01eeb).

In the long-run, Americans should follow the lead of more than 20 countries that have enacted flat taxes. Meanwhile, the two-rate plan would represent a huge step toward that ultimate goal.

##### Related Tags 

[Tax and Budget Policy](https://www.cato.org/tax-budget-policy) 

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