G.O.P. Tax Plan Seeks Lower Rates and Fewer Brackets, Aides Say

The New York Times ^ | 25 Feb 2014 | ASHLEY PARKER

[Theoria]

The Republican plan to overhaul and simplify the nation’s tax code is expected to call for a cut in the top corporate income rate to 25 percent from 35 percent, and a reduction of the seven individual tax brackets to two — at 10 percent and 25 percent — according to aides familiar with the proposal.

The proposal, which is set to be released Wednesday after nearly three years of behind-the-scenes work, is the brainchild of Representative Dave Camp of Michigan, the chairman of the Ways and Means Committee, and it reflects the long-held tax overhaul goals of the Republican-passed budget.

Though about 99 percent of individual tax filers would not have a tax rate above 25 percent under the plan, the remaining 1 percent, whose income is above about $450,000, would be subject to a 10 percent tax surcharge on certain types of income, according to aides familiar with the plan. The surcharge would affect salaried professionals, such as lawyers and accountants, while excluding those whose income comes from production, manufacturing and farming.

The current top tax rate for individuals is 39.6 percent.

The release of the long-awaited plan to overhaul the tax code will come on the same day that Mr. Camp is set to shepherd through the House a bill to stop new Internal Revenue Service regulations on political “social welfare” groups. That underscores a quandary facing House Republican leaders as they head into the midterm elections: Should they limit their legislative agenda to political bills tailored to aid Republican campaigns, or should they take big risks on ambitious policy proposals, such as simplifying the tax code?

[1010RD]

Can you end the taxation of corporations under that plan? You’d kill two birds with one stone - it would end the government regulation of non-profits and end corporations buying politicians for tax favors.

[Tulane]

Right, but with mortgage and other deductions, not really. If the ate eliminating deductions, potential net loss.

[sarge83]

Amen! How about we scrap it all and set a flat tax of 16% for everything, income, fica etc... for all parties, no deductions, no special carve outs. You pay this on your income period. And scrap the business income tax altogether.

[Alberta's Child]

Good point. But anyone in the $400,000+ tax bracket already has Alternative Minimum Tax considerations to deal with, so they’ve lost the ability to deduct things like mortgage interest anyway.