Comparing Congressional Tax Plans November 9, 2016 Scott Greenberg Tom VanAntwerp Scott Greenberg, Tom VanAntwerp Over the past few years, several members of Congress have issued comprehensive tax reform proposals. These tax plans will likely play a large role in framing the tax policy debate in 2017 and beyond. The chart below summarizes the major provisions in five recent Congressional tax reform proposals: The Tax Reform Act of 2014, introduced by former Congressman Dave Camp (R-MI) The Progressive Consumption Tax Act, introduced by Senator Ben Cardin (D-MD) The American Business Competitiveness Act, introduced by Congressman Devin Nunes (R-CA) The “A Better Way” Tax Reform Blueprint, issued by Speaker Paul Ryan (R-WI) The “Simplifying America’s Tax System” Plan, issued by Congressman Jim Renacci (R-OH) To learn more about this chart, see this post. Plans Dave Camp Ben Cardin Devin Nunes House GOP, 2016 Jim Renacci Deselect All Issues individual Taxes: Rates on Ordinary Income Itemized Deductions Credits Alternative Minimum Tax Rates on Capital Gains and Dividends business Taxes: Corporate Income Tax Rate Capital Expenses International Income Pass-through Business other Taxes: Payroll Taxes Estate Tax Other Deselect All Issue Plan Rates on Ordinary Income Dave Camp Establishes two tax brackets with rates of 10% and 25%, as well as an additional 10% surtax on income over $400,000. Consolidates the standard deduction and the personal exemption into a larger standard deduction of $11,000 ($22,000 for joint filers), which phases out for high-income earners. Adds an additional deduction of $5,500 for single taxpayers with at least one child. Ben Cardin Establishes three tax brackets with rates of 15%, 25%, and 28%. The top rate applies to taxable income over $250,000 ($500,000 for joint filers). Replaces the standard deduction and personal exemption with family allowances of $50,000 for singles, $75,000 for heads of household, and $100,000 for joint filers. Devin Nunes No specific proposal. House GOP, 2016 Establishes three tax brackets with rates of 12%, 25%, and 33%. The top rate applies to taxable income over $190,150 ($231,450 for joint filers). Consolidates the standard deduction and the personal exemption into a larger standard deduction of $12,000 ($24,000 for joint filers). Adds an additional deduction of $6,000 for single taxpayers with at least one child. Jim Renacci Establishes three tax brackets with rates of 10%, 25%, and 35%. The top rate applies to taxable income over $750,000 ($1,500,000 for joint filers). Increases the standard deduction to $15,000 ($30,000 for joint filers). Increases the personal exemption to $5,000. Itemized Deductions Dave Camp Eliminates the state and local tax deduction, as well as several other itemized deductions. Caps the mortgage interest deduction at $500,000 of debt. Eliminates the Pease limitation on itemized deductions. Ben Cardin Eliminates several deductions but preserves most major itemized deductions, including the charitable contributions deduction, the state and local tax deduction, and mortgage interest deduction. Eliminates the Pease limitation on itemized deductions. Devin Nunes No specific proposal. House GOP, 2016 Eliminates all itemized deductions except the mortgage interest deduction and the charitable contributions deduction. Jim Renacci Eliminates all itemized deductions except the mortgage interest deduction and the charitable contributions deduction. Caps the mortgage interest deduction at $500,000 of debt. Credits Dave Camp Eliminates several personal credits. Expands the child tax credit from $1,000 per child to $1,500 per child and $500 for non-child dependents, with credit amuounts indexed to chained CPI. Modifies the parameters of the earned income tax credit. Ben Cardin Eliminates most personal credits, including the earned income tax credit and the child tax credit. Creates a comprehensive earned income rebate, which is structured similarly to the current earned income tax credit, phasing in at low levels of earned income, phasing out as earned income rises, and offering a larger rebate to households with children. Devin Nunes No specific proposal. House GOP, 2016 Increases the child tax credit to $1,500, the first $1,000 of which is refundable. Raises the phaseout threshold for the child tax credit for married households from $110,000 to $150,000. Jim Renacci Eliminates most personal credits. Retains the child tax credit. Expands the earned income tax credit by increasing phase-in rates by 100% for childless workers and 40% for others. Alternative Minimum Tax Dave Camp Eliminates the alternative minimum tax. Ben Cardin Eliminates the alternative minimum tax. Devin Nunes Eliminates the alternative minimum tax. House GOP, 2016 Eliminates the alternative minimum tax. Jim Renacci Eliminates the alternative minimum tax. Rates on Capital Gains and Dividends Dave Camp Taxes capital gains, dividends, and interest as ordinary income, with a 40% exclusion. This is equivalent to taxing investment income at 60% the marginal rates of ordinary income (6%, 15%, and 21%). Ben Cardin Taxes long-term capital gains and qualified dividends as ordinary income. Eliminates the 3.8% net investment income surtax. Devin Nunes Prserves the current rates on long-term capital gains and qualified dividends, and taxes interest income at these rates as well. House GOP, 2016 Taxes capital gains, dividends, and interest as ordinary income, with a 50% exclusion. This is equivalent to taxing investment income at half the marginal rates of ordinary income (6%, 12.5%, and 16.5%). Jim Renacci Taxes capital gains and dividends as ordinary income. Corporate Income Tax Rate Dave Camp Lowers the corporate tax rate to 25% over 5 years. Ben Cardin Lowers the corporate tax rate to 17%. Devin Nunes Lowers the corporate tax rate to 25%. House GOP, 2016 Lowers the corporate tax rate to 20%. Jim Renacci Eliminates the corporate income tax. Capital Expenses Dave Camp Eliminates the modified accelerated cost recovery system (MACRS) and replaces it with a system similar to the alternative depreciation system (ADS). Adjusts the basis of depreciable assets for inflation. Repeals last-in, first-out accounting and adds existing business LIFO reserves into the taxable income over a three-year period. Ben Cardin No specific proposal. Devin Nunes Moves to full expensing of capital investment. Allows businesses to carry back unused deductions up to five years or carry them forward with interest. House GOP, 2016 Moves to full expensing of capital investment. Preserves the last-in, first-out method of accounting. Jim Renacci No specific proposal. International Income Dave Camp Shifts to a territorial tax system. Enacts a deemed repatriation of foreign income at a tax rate of 8.75% for cash and cash-equivalent profits and 3.5% on other profits. Modifies several rules related to the tax treatment of foreign-source income, such as Subpart F and the foreign tax credit. Creates several new anti-abuse rules regarding the taxation of foreign-source income, including a minimum tax rate on foreign-source intangible income and a new limitation on business interest deductions. Ben Cardin No specific proposal. Devin Nunes Shifts to a territorial tax system. Enacts a charge of 5% on unrepatriated foreign-source income. House GOP, 2016 Shifts to a territorial tax system. Enacts a deemed repatriation of foreign income at a tax rate of 8.75% for cash and cash-equivalent profits and 3.5% on other profits. Makes the federal income tax border-adjustable, exempting business from paying taxes on exports but denying them a deduction for cost of imported goods. Jim Renacci Enacts a deemed repatriation of foreign income at a tax rate of 8.75% for cash and cash-equivalent profits and 3.5% on other profits. Pass-through Business Dave Camp Taxes domestic manufacturing income of pass-through businesses at a maximum rate of 25%, by exempting it from the 10% “surtax” on incomes over $400,000. Ben Cardin No specific proposal. Devin Nunes Lowers the top rate on pass-through businesses to 25%. House GOP, 2016 Lowers the top rate on pass-through businesses to 25%. Jim Renacci Allows pass-through businesses to elect to be treated as corporations, with no entity-level income tax. Payroll Taxes Dave Camp Requires some owners of pass-through businesses to pay self-employment taxes. Ben Cardin No specific proposal. Devin Nunes No specific proposal. House GOP, 2016 No specific proposal. Jim Renacci No specific proposal. Estate Tax Dave Camp No specific proposal. Ben Cardin No specific proposal. Devin Nunes No specific proposal. House GOP, 2016 Eliminates the estate tax. Jim Renacci No specific proposal. Other Dave Camp Modifies, limits, and eliminates dozens of individual and business tax provisions. Significantly modifies rules for IRAs and 401(k) retirement savings plans. Indexes several tax parameters to chained CPI-U. Ben Cardin Enacts a 10% credit-invoice value-added tax, or a rate modified to achieve revenue neutrality. The tax is border-adjusted. It exempts non-commercial government sales, most of the nonprofit sector, financial services, residential rents, and sales of exisiting residential housing. Devin Nunes Eliminates several business tax deductions and credits, including the domestic production activities deduction and various alternative energy credits. Eliminates the deductibility of net interest. House GOP, 2016 Eliminates several business credits and deductions, including the domestic production activities deduction. Eliminates the deductibility of net interest. Jim Renacci Enacts a 7% credit-invoice value-added tax. The tax is border-adjusted and exempts non-profits and state and local governments. Stay informed on the tax policies impacting you. Subscribe to get insights from our trusted experts delivered straight to your inbox. Subscribe Share Tweet Share Email Topics Center for Economic Analysis Center for Federal Tax Policy Business Taxes Individual and Consumption Taxes Modeling Tax Proposals Tax and Economic Modeling Tags 2016 Election Tax Cuts and Jobs Act (TCJA)