Republican Senators Marco Rubio and Mike Lee proposed a tax reform plan on Wednesday they said would help drive long-term growth by reducing the top corporate rate and simplifying rates for other taxpayers.
Writing in the Wall Street Journal, the two conservative lawmakers said their plan would lower the maximum tax rate for companies to 25 percent from 35 percent. Individuals and families would pay a rate of either 15 percent or 35 percent, rather than the current tiered system with seven rates going as high as nearly 40 percent.
Rubio, a possible 2016 presidential contender, and Lee are scheduled to hold a 10 a.m. EST (1500 GMT) news conference at the Capitol to formally unveil the plan.
The senators said their proposal would end the “double taxation” that companies face on both capital gains and dividends. It also would call for companies with operations in other countries to be taxed only in the country where income is earned.
“The need for tax reform is most acute on the business side of the Internal Revenue Code,” they said in an op-ed piece in the Journal.
“The current system inhibits businesses from expanding, creating jobs and investing in the American economy by taxing them too much and taxing them unfairly,” they wrote.
The plan is likely to be a central theme to any presidential campaign launched by Rubio, the junior senator from Florida.
Corporations have long called for the U.S. tax code to be rewritten, and both Democrats and Republicans have acknowledged the complex system could use reforms. Still, Washington has been unable to overhaul the system for decades.
In their proposal, Rubio and Lee, who represents Utah, said families and individual taxpayers also would see greater fairness by paying one of the two new rates and having deductions available to all filers.
It also would eliminate the so-called marriage penalty, which imposes a higher rate on people who are married when they file jointly rather than filing as individuals. People with children would also receive a new $2,5000 per child tax credit to help lessen the “financial burden of raising the next generation of taxpayers,” Rubio and Lee wrote.
Last month, House Ways and Means Committee Chairman Paul Ryan, the Republican Party’s leading voice on taxes and budgets, said the current Congress has just months to enact any tax deal.
(Reporting by Susan Heavey; Editing by Bill Trott and Jeffrey Benkoe)