Camp's plan would cut income tax rates but impose a new surtax on some high-income families, said a GOP aide who wasn't authorized to discuss the plan by name and spoke on condition of anonymity. The top income tax rate for most families would be lowered from 39.6 percent to 25 percent. However, the plan would impose a new 10 percent surtax on some earned income above about $450,000.Well, the plan is now out, and as you might have suspected, the anonymous GOP aide was blowing some smoke.
Under Camp's proposal, every bracket under 25 percent would be flattened to 10 percent and the 25 percent bracket would kick in at nearly the same income level that it does today. But it would also eliminate the 28, 33 and 35 percent tax brackets and essentially replace the current 39.6 percent tax bracket with a 35 percent one at a slightly higher income threshold. If you're having trouble understanding how someone can sell lowering a tax rate from 39.6 percent to 35 percent as a imposing a new surtax, that's my point.
Of course, looking at tax rates alone is only part of the story. Camp's proposal would eliminate many deductions, so you need to do more than simply compare rates between the two plans and that's what the bipartisan Joint Committee on Taxation did. And according to their analysis, taxpayers with incomes over $1,000,000 would actually see their effective tax rate go down slightly. Heckuva surtax, eh?