WASHINGTON (AP) — House Republicans led by Speaker Paul Ryan unveiled a plan for a simpler tax code, the sixth and last installment of a GOP agenda designed to be a policy counterpoint to the personality-driven campaign of Donald Trump.
Ryan and other Republicans announced the plan at a news conference Friday morning. The proposal would lower tax rates for both families and businesses, although it falls short of the 25 percent top rate for individuals that Ryan promised not long ago.
Instead, the tax reform plan proposes a 33 percent top tax bracket instead of the current top rate of 39.6 percent restored by President Barack Obama in a 2013 victory over Republicans following his re-election.
The Ryan plan also lacks the detail required to measure whether it would maintain the current distribution of the tax burden by income range.
The plan won’t face a vote this year, but like other elements of Ryan’s agenda, it provides a template for potential action next year.
“It will take less from taxpayers at every income level, because Washington takes too much of your hard-earned dollars,” said Rep. Kevin Brady, R-Texas, chairman of the tax-writing House Ways and Means Committee, promising the plan will “make it easier to save for retirement and grow the local economy.”
Individual filers would retain tax breaks for mortgage interest, charitable giving and retirement savings in a decision that reflects the sweeping popularity of such measures. But retaining them would result in revenue losses that would mean rates cuts couldn’t be as big as once promised.
The measure also promises business and international tax reforms to make U.S. companies more competitive with overseas companies, including lowering the corporate tax rate from 35 percent to 20 percent. In exchange, businesses would lose a host of write-offs.
“For families and individuals, the new tax system will simplify and lower tax rates. It also will provide for reduced but progressive tax rates on capital gains, dividends and interest income,” the proposal reads. “The approach reflected in this blueprint will be simple enough to fit on a postcard for most Americans.”
Tax reform is a longtime promise of Republicans, and the code has gotten far more complex in the three decades since the landmark 1986 tax overhaul. But changing the code pits powerful interests against one another and exposes ideological rifts among Republicans and between Republicans and Democrats.
The measure assumes the proposal would generate economic growth that would, in turn, boost revenues. Such “dynamic” effects permit policymakers to promise even lower tax rates that would not add to the budget deficit.