House Republicans will slash personal income taxes to a 25 percent top rate and a 10 percent lower rate as part of their fiscal 2013 budget proposal to be released Tuesday.
The election-year plan from House Budget Committee Chairman Paul Ryan (R-Wis.) would greatly simplify the tax code by collapsing the current system of six tax brackets for individuals into two marginal rates, Republican members and aides said Monday.
It would also lower the top corporate tax rate to 25 percent, and scrap the Alternative Minimum Tax.
The proposal represents an aggressive bid by House Republicans to seize an advantage on taxes ahead of a presidential election expected to center on economic issues and the future of the Bush-era tax rates, which are set to expire at the end of the year.
While the proposal is unlikely to become law this year, it dovetails with plans from GOP presidential candidates and sets the stage for a battle with Democrats and President Obama, who wants to raise tax rates on families with annual incomes above $250,000.
In its corporate tax reform framework, the Obama administration called for lowering the top rate to 28 percent, and ensuring that U.S. manufacturers paid no more than 25 percent.
A number of details are left vague in the House GOP plan, including the income thresholds for the two proposed individual tax brackets.
But the proposal does include more tax reform specifics than last yearâ€™s House GOP budget did, and it lays out a clearer vision of how Republicans on Capitol Hill want to overhaul the tax code â€” an idea that has been embraced by officials and political figures on both sides of the aisle.
The Ryan budget plan would set a $1.028 trillion discretionary spending cap below the $1.047 trillion cap set by last summerâ€™s debt-ceiling deal, and instruct committees to find ways to avoid the automatic cuts also included in that agreement, according to lawmakers briefed on the plan.
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