House Republicans led by Paul Ryan want to redesign the tax code eliminating the higher brackets completely. It would also eliminate taxes on interest, capital gains, dividends, and estates, a trifecta for the wealthy. It would also include a scheme to slash the corporate tax rates, and eliminate the Alternative Minimum Tax.
House GOP budget chief aims at tax code
NEW YORK (CNNMoney) -- In a year when political stalemate is expected to block any real progress on fiscal reforms, House Republicans will take a swing at tax reform in their fiscal year 2013 budget proposal due out on Tuesday morning.
House Budget Chairman Paul Ryan, the lead writer on the budget, and his caucus will call for a reduction in individual tax rates and brackets. Instead of today's six brackets, with rates from 10% to 35%, they are calling for just two -- 10% and 25%. It's not clear how much income would fall under each bracket.
The Republican proposal would also eliminate the Alternative Minimum Tax altogether.
On the corporate tax side, the House GOP would lower the top tax rate to 25% from 35% and switch the United States to territorial system of taxation, meaning that U.S. multinational companies would only owe tax on foreign-made profits to the government of the country in which the profits were made.
This Comes from the slick House GOP website:
Tax Reform
This plan discards a needlessly complex and manipulative tax code, replacing it with a simplified mechanism that promotes work, saving, and investment.
*Provides individual income tax payers a choice of how to pay their taxes – through existing law, or through a highly simplified code that fits on a postcard with just two rates and virtually no special tax deductions, credits, or exclusions (except the health care tax credit).
*Simplifies tax rates to 10 percent on income up to $100,000 for joint filers, and $50,000 for single filers; and 25 percent on taxable income above these amounts. Also includes a generous standard deduction and personal exemption (totaling $39,000 for a family of four).
*Eliminates the alternative minimum tax [AMT].
*Promotes saving by eliminating taxes on interest, capital gains, and dividends; also eliminates the death tax.
*Replaces the corporate income tax – currently the second highest in the industrialized world – with a border-adjustable business consumption tax of 8.5 percent. This new rate is roughly half that of the rest of the industrialized world.
With their post-card slogan the Republicans are pandering to everybody who hates doing their taxes.
At first glance this House GOP tax proposal seems even more regressive than the tax proposals the leading Republican candidates are trotting out. Something I didn't think was even possible.
This proposal would largely remove the super-wealthy from the tax rolls since most of their income tends to come from interest, and capital gains. It would also allow the super-wealthy to set up a wealth based hereditary aristocracy for their progeny.
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities, that is, in proportion to the revenue which they respectively enjoy under the protection of the state.
~ Adam Smith
It is not very unreasonable that the rich should contribute to the public expence, not only in proportion to their revenue, but something more than in that proportion.
~ Adam Smith