Tomorrow at 11:30 am the Republican Study Committee will release its "Taxpayer Choice Act" in anticipation of Democrat Charles Rangel's upcoming tax "reform" bill.
First, it completely does away with the Alternative Minimum Tax. Second, it gives taxpayers a choice: stay with the current tax code, or switch to a "Simplified Tax."
Under the Simplified Tax, there are two rates, 10% and 25%. The 10% rate applies to: First $50,000 for a single income earner, first $100,000 for joint income earners. The 25% rate applies to each dollar after that.
The personal exemptions under the Simplified Tax include $12,500 for a single earner, $25,000 for joint earners. There is also a child tax exemption of $3,500 for each child.
The death tax finally dies, and cap gains and dividends maintain the current 15% rate
The real-estate industry, the tax lawyers and accountants...and the most insidious, the Big Spenders, will be attacking this from Minute One.
Of course, the Big Spenders (as we predicted) attacked the plan, claiming that it will leave an $800++ billion deficit over the next 10 years. Ryan anticipated this:
Ryan said Wednesday that he and his colleagues were out to dispel the "conventional wisdom" that just because a current tax such as the AMT is projected to grow dramatically into the future, the government has a claim on that revenue.
The fact that the Gummint is not entitled to future tax revenues never occurs to the Big Spenders.
In the end, Ryan and other (R) pols simply must address the spending, which is why this post has the "mostly" qualifier. No different from the Wisconsin fiasco, folks.
By the way, this plan, while attractive, is not as attractive as a Consumption Tax (or "Fair Tax") proposal. It maintains the Gummint's oblique 'consumer-spending' preference and in reality, a good deal of the complexity of the current IRS Code.
HT: AmSpec's Wlady