Deficit Panel Proposes Sweeping Tax Changes
NEW YORK (
) -- The White House deficit reduction commission has outlined a six-point plan to cut the deficit by $4 trillion through 2020.
In a 59-page report titled "The Moment of Truth," the panel calls for sweeping reforms to taxes, social security and the budget process and tough cuts to discretionary spending and healthcare cost containment.
Tax reforms will include lowering rates, broadening the base, simplifying the tax code and reducing the tax gap. "Though reducing the deficit will require shared sacrifice, those of us who are best off will need to contribute the most. Tax reform must continue to protect those who are most vulnerable, and eliminate tax loopholes favoring those who need help least," the report said.
The fully phased in proposal envisages individual tax brackets at 12%, 22% and 28%, capital gains and dividends taxed at ordinary income rates, and 12% non-refundable tax credit available to all taxpayers, with the mortgage interest deduction capped at loans of $500,000, among the chief changes.
The proposal calls for a single corporate tax bracket as low as 23% and no higher than 29%. The commission recommends cutting tax expenditures for all businesses to lower deficits, abolishing special subsidies to create a level playing field.
The commission proposes to freeze discretionary spending at 2011 levels in 2012, and bring down spending to inflation-adjusted precrisis levels by 2013. Beyond 2013, discretionary spending caps will demand continued efficiencies from the government by holding spending growth to about half the rate of inflation. The report proposes equal cuts to both security and non-security spending, annual limits to war spending, a three-year freeze on Congress and federal workers pay.
The commission also recommends a number of measures that would impact everything from healthcare spending to mandatory spending on student loans and agricultural subsidies and calls for substantial changes to social security. Read the full report
here.
-- Written by Shanthi Bharatwaj in New York
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