WASHINGTON — The long-awaited simplification of the tax code being drafted by House Republicans would lower the top marginal income-tax rate to 25 percent from 39.6 percent and impose a surtax on some of the nation’s wealthiest households.
But the senate’s leading Republican was already pronouncing the proposal dead Tuesday, a day before its unveiling.
Under the proposal, 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.
In addition, the plan would impose a 10 percent surtax on certain types of earned income over roughly $450,000 a year. The surtax would hit many salaried professionals, such as lawyers and accountants, while dodging farmers and manufacturers — as well as the super-rich, whose income is often derived primarily from interest and investments.
Analysis by the congressional Joint Committee on Taxation does not indicate which of the hundreds of tax breaks that litter the code would be sacrificed to clear the way for the lower rates.
But it does show that the legislation would achieve some of the most important goals of its author, House Ways and Means Committee Chairman Dave Camp, R-Mich.: a simpler code that lowers marginal rates and collects roughly the same amount of money— all without burdening the poor or unduly benefiting the rich.
“Not only did we meet that goal, but 99 percent of all filers are going to be subject to a rate of 25 percent or less,” said a Republican aide familiar with the plan, who spoke on the condition of anonymity to discuss the legislation before its official release. “Ninety-nine out of 100 is a pretty good grade.”
However, Senate Minority Leader Mitch McConnell, R-Ky., said he sees no hope for enacting tax overhaul legislation this year. He blamed Democrats for trying to use the issue to raise revenue by $1 trillion.
The release of the legislation marks the culmination of nearly three years of work by Camp and his GOP colleagues on the committee. Since Republicans took control of the House in 2011, a tax overhaul that would cut the top personal and corporate tax rates to 25 percent has been high on the GOP wish list.
The details of how Camp would make the math work, however, probably won’t be clear until Wednesday. Camp recently lost his Senate partner when Democrat Max Baucus was confirmed as ambassador to China.
The Associated Press contributed to this report.
