On June 24th, House Republicans released “A Better Way—Our Vision for a Confident America,” their blueprint for tax reform proposals. The blueprint would “simplify, flatten, and lower tax rates for families and individuals.
Among the individual income tax proposals, the blueprint would:
- Eliminate the alternative minimum tax (AMT), estate tax and generation-skipping transfer tax
- Reduce the number of tax brackets from seven to three and lower the top marginal rate from 39.6% to 33%
- Ensure that taxpayers currently in the 10-percent bracket will always pay less tax than under current law
- allow for a 50% deduction of net capital gains, interest and dividend income leading to an effective tax rate of 6%, 12.5% or 16.5%, depending on the tax bracket
- simplify tax filing to a fourteen line, “postcard” sized form
Among the business income tax proposals, the blueprint would:
- limit the tax rate for small business and pass-through entities to 25%
- reduce the corporate tax rate to a flat 20%
- provide for the immediate expensing of the cost of business investments
- allow net operating losses (NOLs) to be carried forward indefinitely and increased by an interest factor while eliminating NOL carrybacks
- simplify the international tax rules and eliminate most of the Subpart F rules
Additional details regarding the tax reform proposals can be read here (PDF).