Sens. Marco Rubio of Florida and Mike Lee of Utah offered details of a tax overhaul that would reduce the number of tax brackets for individuals and drop corporate tax rates, all in an attempt to boost economic growth.
While the proposal has been in the works for months, Wednesday is the first time the two Republican senators have put details to many of the proposals they envision.
It’s not yet a formal bill, however, and Rubio’s office said this week that legislation won’t be introduced at this time.
Rubio, a potential presidential candidate, and Lee were scheduled to hold a press conference on the proposal Wednesday morning.
The details of the plan, provided in advance of the press event, describes a broken tax system: “Perhaps no function of our government is more antiquated and dysfunctional than our federal tax system,” the 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.
All income earned up to $75,000 for singles and $150,000 for joint filers will be taxed 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 phase-out, as in the current child tax credit (which is now set at $1,000).
Eliminate the standard deduction in income tax returns. In place of 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 snare many middle-class families.
On businesses taxes, set corporation 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.
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