Senators Mike Lee (R-UT) and Marco Rubio (R-FL) have proposed an overhaul of the tax code:
“The proposal would cut the business tax rate to 25 percent (including for all pass-through business income, so that large and small businesses pay the same rate); end the taxation of capital gains, dividends, and interest; allow businesses to deduct capital investments from their taxable income immediately rather than over time; and move to a territorial tax system. The combination of these reforms would bring us closer to a consumption tax base on the business side, and would make for a dramatically more growth-oriented tax system precisely where today’s tax system most obstructs the economy’s performance.
“On the individual side, Lee and Rubio would bring the top rate back to Bush tax cut levels and consolidate today’s tax brackets into two (at 15 percent and that top 35 percent rate), but business income would be taxed at 25 percent and income from savings would not be taxed. They would also repeal the Alternative Minimum Tax and most of the deductions in the code (leaving only the charitable deduction and a capped mortgage interest deduction that would both be available to all taxpayers, not just those who itemize). They would then replace today’s standard deduction with a $2,000 individual ($4,000 per married couple) credit, end the marriage penalty in the tax code, and provide a new $2,500 per child credit (alongside the existing $1,000 credit, which phases out with income) to offset some of the over-taxation of parents in our system—providing very broad-based tax relief, including for families mostly burdened by the payroll tax rather than the income tax since the credit applies against both. “
The full report can be read below: