Potential presidential candidate Sen. Marco Rubio of Florida outlined a tax proposal Wednesday that he said would result in a “significant tax cut for the vast majority of Americans” and – its backers hope – would lead to a major increase in economic growth.
The plan would overhaul both individual and business taxes, decreasing the number of tax brackets for individuals and reducing corporate tax rates.
Joined by Sen. Mike Lee of Utah, Rubio pitched the proposal that could become central to any presidential run he may undertake.
But the two Republican senators are not yet at the stage of turning their proposal into actual legislation, despite the fact that they’ve been talking for months about some of the details.
Instead, Lee said at a news conference that the two senators plan to “seek input from other people, and in time allow this to mature into a plan to be introduced in the form of legislation. As for right now, we’re still trying to perfect it, and develop it.”
Lee introduced a bill last Congress that hit many of the same themes on individual taxes as Wednesday’s proposal; that bill didn’t go anywhere in the Senate, then controlled by Democrats.
Asked why it has taken so long – given that the ideas on individual taxes had been introduced previously, and that the outlines of the business side were sketched out last fall – Lee said, “This is complicated stuff.”
“As Sen. Rubio said, you don’t want to rush something like this,” Lee said. “This represents a pretty significant shift in tax policy. It’s a pretty significant effort. We don’t want to rush it. Rome wasn’t built in a day.”
Conservatives generally cheered the proposal Wednesday, which, when formalized, is likely to be an important part of any presidential run by Rubio.
Rep. Debbie Wasserman Schultz of Florida, who doubles as chairwoman of the Democratic National Committee, called the plan more of the same.
“Rather than propose a serious fiscal plan that aims to grow the middle class and expand opportunity for all Americans, Marco Rubio has assembled what amounts to a GOP donor wish list,” she said in a statement.
At the news conference Wednesday morning, Rubio again declined to say whether he’ll run for president.
Experts have indicated it would be difficult to get any tax proposal through Congress this year.
The proposal by Rubio and Lee details a broken tax system. “Perhaps no function of our government is more antiquated and dysfunctional than our federal tax system,” their proposal says.
According to the senators’ proposal, the Rubio-Lee plan would:
– Scale back the number of individual income tax brackets – now seven, ranging from 10 percent to 39.6 percent – and the number of filing statuses (there are now four: single, married filing jointly, married filing separately and head of household). Rubio and Lee propose just two brackets: 15 percent and 35 percent, and they propose eliminating the head-of-household filing status.
– Tax all income earned up to $75,000 for singles and $150,000 for joint filers at a 15 percent marginal rate. All income earned above this threshold will be taxed at a 35 percent rate.
– Boost the child tax credit to a maximum of $2,500 per qualifying child. It would have no income phaseout, as does the current child tax credit (which is now set at $1,000).
– Eliminate the standard deduction in income tax returns. In place of the standard deduction and personal exemption, create a personal credit of $2,000 for individuals and $4,000 for joint filers.
– Eliminate all itemized deductions except for a reformed home mortgage deduction and the deduction for charitable giving.
– Eliminate the “alternative minimum tax,” a parallel tax-calculation system initially designed to make sure wealthy individuals didn’t escape their tax obligations but that has instead started to ensnare many middle-class families.
– On businesses taxes, set corporate taxes at 25 percent, and eliminate taxes on dividends and capital gains at the individual level.
– Allow businesses to deduct 100 percent of expenses, immediately accounting for the costs of capital investments in the year they are made.