At the center of President Obama’s long-range plan to trim the deficit is an extension of the Bush-era tax cuts for lower and middle income taxpayers after 2012, but not taxpayers now in the top two rate brackets. Taxes would increase for higher income individuals (individuals with incomes above $200,000 and families with incomes above $250,000). Elimination of oil and gas tax preferences, a permanent research tax credit and an extension of the 2011 payroll tax cut.
Gang of Six Tax Proposals
Reduce the budget deficit by $3.7 trillion over 10 years through a combination of spending cuts and revenue raisers.
Individual Tax Rates
The Gang of Six would replace the current individual marginal income tax rate schedule with three new tax brackets, ranging from: 8-12 percent; 14-22 percent; and 23-29 percent. The alternative minimum tax (AMT) would be repealed as well.
The Gang of Six would reduce yet unspecified number deductions and credits. Possible tax expenditures up for reform include the home mortgage interest deduction, the deduction for charitable contributions and the deduction for certain medical expenses.
The Gang of Six would establish a single, lower corporate tax rate between 23 percent and 29 percent and eliminate many yet-to-be specified business deductions and credits.
House Republican Study Committee (RSC)
The Cut, Cap and Balance Act, ultimately rejected by the Senate, did not include any tax increases.
The Cut, Cap and Balance Act suggeted lower rates while broadening the tax base. The RSC to date has not offered any further specifics on how it would lower rates and broaden the tax base. The RSC has previously indicated its opposition to any scaling back of the Bush-era tax cuts.
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