A new plan has emerged in Washington in the context of debate over raising the debt ceiling, the legal limit of how much the federal government can borrow. Lawmakers have proposed several plans that, in addition to raising the debt ceiling, try to address the country’s growing deficit. Many of theses have ended up bogged down in partisan differences, but a recently proposed idea, carrying the mark of the Gang of Six, an old term in Washington denoting bi-partisan support, has managed to earn praise from both sides of the aisle.
The plan, although still only in its infancy, contains a number of drastic changes to the current tax practices of the United States, including lowering the top tax rates for both corporations and individuals to 23-29 percent (that’s down from the current high of 35 percent), reducing the number of individual tax brackets for individuals to three, and creating a single tax bracket for corporations. The plan also calls for the modification or elimination of a number of tax breaks and credits, including those for mortgage interest and charitable contributions. The plan also calls for the elimination of the Alternative Minimum Tax (AMT).
It should go without saying that all of this is in its infancy and any eventual bill will likely change quite a lot before becoming law. That said, these proposals are significant changes to the current tax landscape and if they become law, it will greatly behoove taxpayers to reevaluate their tax plans.
For more information on this or other tax issues, contact Horowitz & Weinstein.