GOP proposes radical overhaul of the income tax

The Republican chairman of the tax-writing House Ways and Means Committee unveiled a bold but politically hazardous overhaul of the nation’s tax laws Wednesday that would jettison hundreds of popular tax breaks in favor of a simpler code with lower rates.

The proposal drafted by Rep. Dave Camp (R-Mich.) would significantly reduce rates for individuals and corporations, pushing the top corporate rate down to 25 percent from 35 percent and the top individual rate down to 35 percent from 39.6 percent.

Tax-filing season would also be much easier for most households, with 95 percent of filers likely to claim a new expanded standard deduction and call it a day.

However, all that simplicity comes at the cost of hundreds of credits and deductions that have been woven into the American way of life. There would be no more personal exemptions for you, your spouse and your dependents; no more credit for child care; no more deductions for medical bills or for state and local taxes.

The mortgage interest deduction would be available only for mortgages worth less than $500,000, instead of the current $1 million (though currently held mortgages would be grandfathered). And an important tax break for the poor would be dramatically scaled back.

Investment income would lose its special status and be taxed like regular income. And the wealthiest households — those earning more than $450,000 a year — would lose virtually every deduction and credit, including the tax-free treatment of health insurance premiums paid by their employers.

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I haven't read enough on this bill to form a definitive opinion, but my first impression is one of pleasant surprise. It's not exactly a state secret that the Republicans in Congress, especially the House, have been a bitter disappointment to me. But this bill sounds like it could be a really big step in the right direction. Assuming there isn't something horrid buried in it that I haven't found out about yet, I hope the bill gets some serious debate. And maybe (dare I hope?) some constructive input and support from Democrats. There's quite a bit in here that should appeal to their anti-1% constituents.