Presidential candidate and former Florida Gov. Jeb Bush (R) is out Wednesday with his plan to overhaul the federal tax code, which he says will help him achieve an ambitious goal of averaging 4% GDP growth during his time as president.
Bush outlined the plan in a Wall Street Journal op-ed released late Tuesday night, and he plans to give a speech in North Carolina detailing its points later Wednesday.
Some of the key elements:
- He wants to cut the number of individual tax brackets from seven to three — 28%, 25%, and 10%. Right now, the highest individual tax rate is above 39%.
- He would cut the corporate tax rate from its current level of 35% down to 20%.
He seemingly takes aim at “carried interest,” a loophole that many investment managers use to pay lower percentages on their incomes.
“We will retain the deductibility of charitable contributions but cap the deductions used by the wealthy and Washington special interests, enabling tax-rate cuts across the board for everyone. And while we’re doing that, we will treat all noninvestment income the same, so unless you stake capital in an investment, you won’t be able to claim the capital-gains tax rate on your market gains,” he wrote.
- He says he would expand the Earned Income Tax Credit, ding the estate tax, get rid of the alternative minimum tax, and end the employee’s share of the Social Security tax for workers older than 67.
- Finally, he would impose a one-time tax of 8.75% on more than $US2 trillion in overseas profits, which he says will be payable over a 10-year stretch.
“The code is rigged with multiple carve-outs for favoured industries. It penalizes people for moving up the economic ladder. It gives tax deductions for borrowing costs, thereby encouraging companies to take on too much debt and raising concerns about financial fragility, rather than having them focus on real investment and hiring,” Bush wrote in the op-ed.
Bush has faced, and embraced, scepticism that has followed his 4% growth target. And as The Washington Post’s Jim Tankersley points out, the outline of the plan contains many of the same themes as 2012 Republican nominee Mitt Romney. His tax plan, which amounted to a large tax cut for wealthier Americans, is credited with leading to big losses with lower-income voters.
But there are distinct elements that stick out in Bush’s plan — going after the “carried interest” loophole, for example, a nod to conservative populists. And the expansion of the Earned Income Tax Credit is a win for so-called “reform conservatives” who have pushed Republican candidates to cater policies to lower-income Americans.
“It isn’t clear whether American voters are ready to decide an election based on tax-overhaul proposals, which haven’t registered among their biggest concerns,” The Journal’s John McKinnon wrote in analysing Bush’s tax plan on Wednesday. “Mr. Bush might be aiming to at least avoid losing on the issue.”
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