Businesses could deduct investments immediately and families would get a new $2,500 tax credit per child under a tax proposal being released Wednesday by Sen. Marco Rubio of Florida, a potential Republican presidential candidate.
The plan would cut the tax rate on business income to 25 percent and the top income tax on individuals to 35 percent from 39.6 percent, according to an opinion piece Rubio and Sen. Mike Lee, a Utah Republican, wrote in The Wall Street Journal on Tuesday. Rubio and Lee plan to release more details Wednesday.
"We believe that pro-growth, pro-family tax reform will empower the American people to succeed in a revived free market, in which everyone has an equal opportunity to participate," Rubio and Lee wrote.
In contrast with other Republicans, Rubio and Lee place more emphasis on tax benefits for families and less on rate cuts.
The plan contains major benefits for businesses, and it’s unclear what tax breaks the senators would propose to curtail.
Corporations would pay a top tax rate of 25 percent, down from 35 percent today, and their shareholders wouldn’t pay taxes on capital gains and dividends.
American corporations would no longer face U.S. taxes on their foreign income, and companies could write off investments in the first year rather than spreading deductions over the life of an investment.
Other business income, now taxed at individual rates up to 39.6 percent, would also be taxed at 25 percent.
In addition to the expanded child tax credit, Rubio and Lee proposed to consolidate the current seven tax brackets into two — 15 percent and 35 percent.
The changes proposed by the senators could significantly cut the tax rates on high-income households, which earn more of their income from investments and businesses than lower-income wage earners.
It’s not clear, based on what Rubio and Lee have released so far, how their plan would affect federal budget deficits. The nonpartisan Tax Policy Center said last year that an earlier version of the plan would amount to a $2.4 trillion tax cut over a decade, or about 6 percent of projected federal revenue.
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