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Tags: lee | rubio | tax | code | revamp

Sens. Lee and Rubio Detail Tax Reform Proposal

Sens. Lee and Rubio Detail Tax Reform Proposal
Senators, Mike Lee, R-Utah., left, and Marco Rubio, R-Fla. (Andrew Burton/Getty Images)

By    |   Tuesday, 23 September 2014 09:14 AM

Republicans Sens. Mike Lee of Utah and Marco Rubio of Florida are proposing a reformed tax code that simplifies the tax brackets to just two, ends the marriage penalty, increases the child tax credit and eliminates double-taxing corporations that do business outside the United States.

In a Wall Street Journal op-ed, Lee and Rubio write that the outdated current tax code traps poor families in poverty and unfairly burdens married couples with the marriage penalty that taxes couples at a higher rate than it if they filed individually.

The senators argue that by consolidating the current system of multiple tax brackets, the tax code should instead be limited to two -- 15 percent and 35 percent – while doing away with or reforming deductions, “especially those that disproportionately benefit the privileged few at everyone else's expense.”

They also seek to eliminate the “parent tax penalty,” which they characterize as a “hidden, double penalty” that charges parents twice for federal senior entitlement programs.

“(Parents) of course pay payroll taxes, like everyone else,” they write, “but unlike adults without children, they also shoulder the financial burden of raising the next generation of taxpayers, who will grow up to fund the Social Security and Medicare benefits of all future seniors.”

To “level the playing field for working parents” they propose augmenting the current $1,000 child tax credit with an additional $2,500 “applicable against income taxes and payroll taxes—i.e., the taxes that most burden lower- and middle-income families. The credit would not phase out, and would be refundable against income tax and employer and employee payroll tax liability.”

“Millions of Americans up and down the income scale choose to invest their personal economic freedom in children and not just in commerce—in human and social capital rather than just financial capital,” they write. “We believe it is wrong to punish such a choice.”

They also seek to “retool” change the Earned Income Tax Credit “in coordination with means-tested programs to create a welfare system that works better and removes poverty traps.”

This would create a system more conducive for low-income workers to reach the middle class, according to Lee and Rubio.

To become competitive in the global economy, the senators propose cutting the current 35 percent tax rate on businesses, though they have not yet come up with a figure that will “end the problem of corporate inversions and the loss of American jobs to other nations.”

They would allow businesses, regardless of size, “to deduct their expenses and capital investments while integrating all forms of business taxation into a consolidated, single-layer tax.”

Also under the proposal, businesses located outside the U.S. would be taxed only in the country where the income is earned, “rather than double-taxed when the money is brought back home.”

“In sum, our proposal would make it easier for Americans to find jobs and easier for businesses to create them,” the men write. “It would help restore upward mobility at the bottom of our economy and fair competition at the top. And it would restore equal opportunity to working parents, America's ultimate investor class.

If Republicans win the Senate this fall, passing pro-family, pro-growth tax reform should be a cornerstone of our agenda next year. The plan we have outlined won't only help revive the American dream, but also make it more attainable for more Americans than ever before.”

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Politics
Republicans Sens. Mike Lee of Utah and Marco Rubio of Florida are proposing a reformed tax code that simplifies the tax brackets to just two, ends the marriage penalty, increases the child tax credit and eliminates double-taxing corporations that do business outside the...
lee, rubio, tax, code, revamp
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2014-14-23
Tuesday, 23 September 2014 09:14 AM
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