U.S. corporations would get the largest federal income-tax rate cut in history, and their foreign earnings would no longer face domestic taxes when they return to the U.S. under a plan that House Republicans unveiled Friday.
The changes would remove incentives for U.S. companies to seek offshore tax addresses for lower tax bills, said Representative Kevin Brady, the chairman of the tax-writing House Ways and Means Committee. “America will leapfrog from dead last” among developed economies in terms of business-friendly tax policy, “to the lead pack,” said Brady, a Texas Republican.
Many business owners, including those who receive income from partnerships, would also pay far lower rates on their earnings. And investors would receive a cut of 30 percent or more in the rate they pay on gains.
The Republican tax-overhaul blueprint, a goal of House Speaker Paul Ryan of Wisconsin, also offers rate cuts on individuals’ regular income by consolidating the seven existing tax brackets to three. The top bracket’s rate would be 33 percent, down from 39.6 currently. And a near-doubling of the standard deduction would be a boon for middle-class taxpayers.
The plan contains some familiar Republican goals: abolishing the estate tax, which applies to estates worth more than $5,450,000; simplifying most taxpayers’ returns down to the size of a postcard; and streamlining the Internal Revenue Service.
“Once again, Republicans are planning to hand massive tax giveaways to millionaires and billionaires on the backs of hard-working American families,” House Minority Leader Nancy Pelosi of California said in a statement released by her office. She questioned the plan’s cost and said it “takes us further from restoring fairness to our tax code.”
Under the plan, part of a six-volume election-year policy agenda that House Republicans have rolled out this month, the statutory corporate income-tax rate would drop to 20 percent from 35 percent. It would be “the largest corporate tax cut in U.S. history,” according to a written description of the plan.
For Ryan, who was elected speaker in October after serving as chairman of the tax-writing Ways and Means Committee, the plan represents a path toward a long-sought goal: comprehensive tax reform. Yet with a presidential election under way -- and the Republicans’ continued control of the U.S. Senate next year in question -- that path remains difficult.