Rubio-Lee Tax Reform Plan: Good but could be Better
March 6, 2015
Senator Marco Rubio (R-FL) and Mike Lee (R-UT) recently introduced the Economic Growth and Family Fairness Tax Reform Plan in an effort to incrementally reform the U.S. tax system. The plan is not without its problems.
To begin with, the top tax rate will be 35 percent, down only from 39.6 percent. Even worse, the 35 percent tax rate will be levied against any taxable income above $75,000 for single tax payers and $150,000 for married taxpayers. As a result, a significant number of taxpayers will face higher marginal tax rates.
On the bright side, Rubio and Lee's proposal does include attractive pro growth features. They include:
- The corporate tax rate will be reduced from 35 percent (The second highest rate in the world) to 25 percent;
- Elimination of the capital gains tax, the double tax on dividends and the second layer of tax on interest;
- Elimination of punitive deprecation rules that force businesses to overstate their income in ways that discourage new business investment;
- Elimination of the death tax;
Under the Rubio-Lee plan, the economy could grow faster, more jobs will be created and workers could enjoy higher wages.
Source: Daniel J. Mitchell, "Grading the Rubio-Lee Tax Reform Plan," Cato Institute, March 4, 2015.
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