The Wall Street Journal
By: John D. McKinnon
April 6, 2011
The House Republicans' tax plan for the next fiscal year promises to lower rates and boost economic growth, while holding federal revenue more or less steady as a share of the economy.
But it provides few details on how to reach the revenue goal. That leaves many difficult decisions for later.
The GOP plan would overhaul the tax codes for individuals and businesses. Aiming to promote economic growth, it would lower the top tax rates for individuals and corporations to 25%, from the current 35%. It also promises to reduce the number of individual tax brackets from six.
To raise revenue needed to offset the rate cuts, the plan would reduce or eliminate an unspecified number of tax breaks, such as deductions and credits. The plan would also repeal several tax increases from the 2010 health-care law, including the 3.8% surtax on higher earners' investment income.
The White House charged the GOP plan "cuts taxes for millionaires." Other Democratic critics warned it could mask potential tax increases for middle-class earners, for example from eliminating family tax breaks that higher earners don't receive.
"You can make it revenue-neutral...but it's going to come out of the hides of the middle class," said Michael Ettlinger, vice president for economic policy at the liberal Center for American Progress. "Once you start talking a 25% top rate, there's no way you can make up for that" by scaling back tax breaks for wealthier taxpayers.
But Democrats raised taxes on the middle class in last year's health-care law, and are seeking more increases, said Sage Eastman, a Ways and Means Committee GOP aide. Republicans are advocating "tax reform that makes the code simpler, flatter and fairer," he said.
At a Senate hearing, Treasury Secretary Timothy Geithner said the department was working on a revenue-neutral corporate-tax overhaul to lower those rates "very substantially."