House Republicans are poised to unveil their new plan to simplify the tax code and — guess what? — it’s the Paul Ryan Path to Poverty! Tada!
The long-awaited simplification of the tax code being drafted by House Republicans would slash the top income tax rate to 25 percent from 39.6 percent and impose a surtax on some of the nation’s wealthiest households.
Under the proposal, set for release Wednesday, the vast majority of taxpayers would see little change in the ultimate size of their tax bills, according to a nonpartisan congressional analysis of the legislation.
But the tax system would be dramatically simpler, with seven existing brackets collapsed into just two, set at 10 percent and 25 percent.
The kicker is the surtax for people making more than $450,000 in the 25 percent bracket would not apply to interest, investments, or capital-gains.
In other words, it wouldn’t apply to the 1 percent or the super-rich. They would continue to pay almost nothing in taxes while those who earn far less money would pay far higher effective rates.
What isn’t clear now but will become clear on Wednesday is how House Republicans propose to pay for reducing the top rate from 39 percent to 25 percent.
Right now we can only guess, but I would call it a good guess to assume that it will remove deductions that are primarily used by working families.
If their proposal does anything substantive to close loopholes for corporations or the super-rich, I’ll eat my hat. It’s much easier for me to believe that their plan signals a desire to have their cake and eat it too by reducing the top bracket from 39 to 25 percent while doing nothing to ensure the rich pay their fair share.
Update… Senate Minority Leader Mitch McConnell has preempted tomorrow’s reveal. I assume it’s because he knows the plan is DOA crap and this is an election year.
BREAKING: Senate GOP Leader McConnell says he sees no hope for tax reform this year.
— The Associated Press (@AP) February 25, 2014