The House Republican budget proposal for 2013 calls for reducing the current top income tax rate from 35 percent to 25 percent, resulting in Democrats accusing the Republicans of protecting rich taxpayers at the expense of the middle class.
Under the new budget, introduced by Wisconsin Republican Rep. Paul Ryan, there would be two individual tax brackets, 15 percent and 25 percent. The alternative minimum tax, which was designed to eliminate deductions that favor the wealthy, would be eliminated. It's not the first time the AMT has come under fire since it began sweeping in more middle-class taxpayers instead of targeting only the wealthy. In exchange for lowering tax rates, the new budget proposal eliminates tax breaks but doesn't specify which ones at this point.
Currently, there are six income tax brackets: 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent. Generally, taxpayers with income above $379,151 pay the top rate. The GOP proposal doesn't break down the income levels for the two tax brackets in the budget. The top corporate rate, currently 35 percent, would also drop to 25 percent in the new budget.
While both Democrats and Republicans have said the current tax code contains too many deductions and needs to be revised, the two sides differ on how to do it. Ryan says the Republican plan would encourage economic development, and Democrats counter that the current tax code favors the rich over the middle class and, in the past, have suggested imposing a surtax on millionaires.
Ryan's proposed tax cuts will reduce government revenue by $4 trillion over the next decade, but he has also proposed numerous spending cuts that will save more than $5 trillion over the next decade compared with the White House plan. The tax code is likely too big an issue to resolve in an election year, but Ryan has said he wants to present a clear Republican plan for fiscal responsibility.
Do you think the Republican budget proposal favors rich taxpayers over the middle class by lowering the top tax bracket while eliminating tax breaks?
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