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Lower everyone's rates - and reduce deductions for the middle. Oh ya, and tax health care benefits.
Republicans on the congressional debt-reduction supercommittee have proposed a tax overhaul that they claim would raise about $290 billion in additional taxes over the next decade. The plan limits tax breaks as a way to pay for lower tax rates and some deficit reduction. Details of the plan, as proposed by Sen. Pat Toomey, R-Pa.:
— All marginal income tax rates would be lowered by 20 percent, meaning the top rate would go from 35 percent to 28 percent and the bottom rate would go from 10 percent to 8 percent.
— The top tax rate on capital gains would remain 15 percent.
— The top tax rate on dividends would remain 15 percent.
— The estate tax would stay at 35 percent, with the first $10 million of a married couple’s estate exempt.
— The tax benefits from itemizing deductions and excluding employer-provided health insurance from taxable income would be limited to 2 percent of taxpayer’s adjusted gross income.
— A new measure of inflation would be used to adjust the tax brackets each year, resulting in more people jumping into higher tax brackets as their wages increase.
