WASHINGTON, D.C. – Sen. Mike Lee introduced a tax reform plan this week that would replace much of today’s complex tax system with a new, simple structure that provides solutions for America’s ongoing opportunity crisis and ends the discrimination of parents in the tax code. The Family Fairness and Opportunity Tax Reform Act is a pro-family, pro-growth plan that incentivizes social mobility, promotes middle-class economic security, and improves opportunity for all Americans.
If there is any single group of people in the entire country whose equal opportunity to pursue happiness we should make sure to protect, it is our ultimate entrepreneurial and investor class: America’s moms and dads. The family has emerged as perhaps the most important institution in our economy. It is an incubator of economic opportunity, an indicator of economic success, and grows more economically important every day.
The current tax code singles out parents of young children for unfair and extremely expensive discrimination. It is what I call the ‘parent tax penalty,’ a glitch in the federal tax code that forces parents to contribute to senior entitlement programs not once, but twice. My plan levels the playing field to treat all taxpayers more equally. For a middle-class family, this is an immediate, potentially life-changing reform.
Under this plan, a married couple with two children making the median national income of $51,000 would see a tax cut of approximately $5,000 per year.
“In short,” Lee said, “the Family Fairness and Opportunity Tax Reform Act would restore opportunities to working parents and their children to pursue happiness that right now federal policy unfairly denies them.”
The proposed tax reform has drawn praise from various quarters:
“Senator Mike Lee and others here are proposing incredibly sound policies to provide incentives for child rearing families,” former Florida Gov. Jeb Bush said, “to give them the kind of support that they need through our tax code.”.
“Sen. Mike Lee, the Utah conservative, announced an ambitious plan to reform taxes — much the most attractive one we have heard from any Republican for a long time,” the National Review Editorial Board said.
“(The Family Fairness and Opportunity Tax Reform Act) represents genuinely new thinking about how Republicans ought to approach domestic policy…,” Conservative commentator Reihan Salam said, “it will represent a substantial tax cut for middle-income families with children.”
How it Works
- Establishes two individual income tax rates: 15 percent on all income up to $87,850 – and twice that amount for married couples – and 35 percent on all income above that;
- Offsets the parent tax penalty by providing an additional $2,500-per child tax credit, available to allparents of dependent children and applicable to payroll taxes as well as income taxes;
- A $2,000 personal credit to offset the removal of the 10 percent bracket and the personal exemption;
- A new charitable deduction that would be available to all taxpayers, not just current itemizers;
- A new mortgage interest deduction, also available to all home-owners, but capped at $300,000 worth of principal;
- Eliminates special interest loopholes
- Repeals Obamacare taxes and the AMT
- Eliminates the state and local deduction
- Revenue expected to be 16-20 percent of GDP
What it Does
- Simplifies the tax code and lowers the top marginal rate
- Eliminates an unfair and dysfunctional double standard
- Vastly improves the economic security of middle-class Americans
- Equalizes a system that is rigged in favor of the wealthy and well-connected
- Provides substantial tax relief for most Americans
- Creates pro-growth incentives to encourage new jobs and investment
- Focuses deductions on the families and communities who need it most
- Responds to the inequality crisis facing the country today
- Consistent with conservative reform principles
Submitted by the offices of Sen. Mike Lee
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