Two of the most conservative members of the Senate – one of them a potential presidential contender – are set to release a tax overhaul proposal that would reduce the number of tax brackets for individuals and drop corporate tax rates, all in an attempt to boost economic growth.
While details of the proposal by Sens. Marco Rubio, R-Fla., and Mike Lee, R-Utah, won’t be released until Wednesday morning, information on the proposal has trickled out over recent days.
Rubio and Lee outlined the general principles in a Wall Street Journal opinion piece last September, writing that “the current tax code taxes too much, taxes unfairly and conspires with our outmoded welfare system to trap poor families in poverty, rather than facilitate their climb into the middle class. Our reforms seek to simplify the structure and lower rates.”
The proposal has a slim chance of becoming law, experts say, as Democrats would be likely to block tax-law changes in the Republican-controlled Senate.
Still, Rubio’s office said, the senators have continued to work on the plan, and full details will be unveiled Wednesday, although legislation won’t be formally introduced at this time, according to Rubio spokeswoman Brooke Sammon.
In an interview last month with McClatchy, Rubio, who’s laying groundwork to run for president, gave a preview of the tax plan.
He said it would “would help millions of Americans, it would put more money in their pockets, but more importantly it would help to massively grow the economy, creating opportunity.” It would increase the child tax credit, helping “hardworking families afford the cost of living. It would make America a more attractive place for job creators, thereby contributing to a healthy economy,” he said.
Sammon pointed to a story by Politico detailing comments Rubio made about the plan at a recent event in Florida sponsored by Club for Growth, a free-enterprise advocacy group.
That story said the Rubio-Lee proposal would reduce corporate tax rates from 35 percent to 25 percent and eliminate capital-gains taxes and taxes on dividends. It also would create more parity in the way different kinds of corporate entities are treated in the tax code. As for individual taxes, Rubio and Lee will propose two tax brackets – 15 percent and 35 percent – down from seven now, the story said.
The proposal would join efforts by other lawmakers to overhaul corporate and individual taxes, although the effort to do so faces significant challenges.
U.S. Rep. Paul Ryan, the Wisconsin Republican who heads the tax-writing House Ways and Means Committee, said last month that Republicans would consider a partial tax deal but that the door would be open only through the summer. He also signaled at a news conference that he’d be open to a small tax deal as a first step toward a larger one.
As for the Rubio-Lee proposal, Darrell M. West, vice president and director of governance studies at the Brookings Institution, a Washington research center, said its chance of getting anywhere fast was slim.
“Tax reform has very little chance of moving in this Congress,” West said Tuesday. “Rubio’s version almost certainly would be filibustered by Democrats or vetoed by President Obama. It usually takes bipartisan support to pass legislation as complicated as tax reform.”
Added Roberton Williams of the Tax Policy Center, another Washington think tank: “We know from past experience that tax reform is really hard, because you have to get rid of a lot of preferences that people enjoy.”
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