On March 20, House Budget Chairman Paul Ryan (R-WI) released the House Republican’s proposed blueprint for the fiscal 2013 federal budget. The proposal, which recommends cuts in government spending, includes a template for reforming the tax code. The blueprint contemplates a simpler individual income tax code, with only two tax brackets set at 10 and 25 percent, and would repeal the alternative minimum tax. The budget also proposes lowering the corporate tax rate to 25 percent, and would shift the U.S. from a worldwide system of taxation to a territorial one. The budget also proposes expanding the tax base by enacting unspecified base broadening measures for both individual and corporate taxpayers, with the stated goal of maintaining government revenue in the range of 18 to 19 percent of GDP, which is consistent with the long term historic average.
While the House budget is not expected to become law, with leaders of both parties and the Administration in agreement that some type of tax reform should be finalized in the near-term, the House Republican fiscal 2013 federal budget blueprint can be viewed as another call for tax reform. The blueprint notes the burgeoning consensus that tax reform must be tackled in the immediate future. The following summary provides highlights of what House Republicans believe should be key elements in any tax reform and deficit eduction plans going forward.
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