Earlier this month I highlighted a potential tax compromise brewing in Illinois. State senate Republicans and Democrats released a proposal to increase Illinois’s individual income tax and corporate income tax, expand...
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- The Paul Ryan Budget Plan
The Paul Ryan Budget Plan
The House Budget Committee, chaired by Congressman Paul Ryan (R-WI), released its budget proposal today, and tax reform is a significant component. On the individual income tax side, Congressman Ryan would consolidate our current six brackets, taxed at rates from 10% to 35%, into two, taxed at 10% and 25%. He also would eliminate the Alternative Minimum Tax.
On the corporate income tax side, the Ryan budget reduces the top rate from 35% to 25% and shifts to a "territorial" tax system in which the U.S. would tax only income earned within its borders. (This would allow multinational corporations to bring home profits earned abroad without paying additional taxes.)
These tax cuts are paid for with base broadening measures and the elimination of various deductions, credits, and loopholes. The plan is not specific about precisely what would be cut, but it does propose that the base broadening be of sufficient magnitude to be revenue neutral in the short term. Given the significant rate reductions and AMT elimination, it's likely that this would require the elimination of most tax expenditures and a complete overhaul of the tax code.
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