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It calls for an unspecified, but potentially substantially lower tax rate for both individuals and corporations, though none of the current tax breaks would be included. The Senate's top Democratic and Republican tax-writers, namely Senate Finance Committee Chairman Max Baucus, D-Mont., and the committee's top Republican, Orrin Hatch of Utah, unveiled the plan last week.
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CLEAN SLATE TAXES CODE
That's 27 years," Bowles told CNBC's " Squawk Box." "I mean, just think about how the world has changed economically over the last 27 years and how the U.S.'s competitive position has changed during that time period, and think about the fact that money flows freely now and we have a tax code that is not only inefficient and ineffective, it's also globally anti-competitive." "Our tax code hasn't been reformed since 1986.
CLEAN SLATE TAXES FULL
The full text of the senators’ letter is available here.A tax reform plan that would start over with a "blank slate" by eliminating all tax breaks and lowering tax rates for both individuals and corporations alike won the approval of Erskine Bowles on Monday, a former White House chief of staff to President Bill Clinton and current co-chairman of a deficit commission created by President Barack Obama to broker a bold, bipartisan deficit deal. Senators Baucus and Hatch said the JCT report demonstrates that the more tax expenditures allowed in the tax code, the less revenue available to reduce tax rates or reduce the deficit.
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Likewise, every $200 billion of corporate tax expenditures that are added back would, on average, raise the top corporate income tax rate by 1.5 percentage points from what they it would be under the blank slate. However, JCT and Finance Committee staff determined that every $2 trillion of individual tax expenditures that are added back would, on average, raise each of the seven individual income tax brackets by between 1.3 and 2.2 percentage points from what they would be under the blank slate. The amount of rate reduction would depend on how much revenue was reserved for deficit reduction, if any, and from which income groups. To help inform submissions, the Senators had the nonpartisan Joint Committee on Taxation (JCT) and their staffs analyze the relationship between tax expenditures and the current tax rates if the current level of progressivity is roughly maintained. But the tax code is also littered with preferences for special interests.” “Indeed, we both believe that some existing tax expenditures should be preserved in some form. “This blank-slate is not, of course, the end of the discussion,” Senators Baucus and Hatch write. Senators have until July 26 to submit their proposals. The Senators stress tax expenditures and other provisions should be added back only if they: help grow the economy, make the tax code fairer, or effectively promote other important policy objectives. In an effort to develop the foundation for tax reform legislation, Senators Baucus and Hatch are calling on all Senators to submit legislative language or detailed proposals for what tax expenditures and other provisions should be added back to a reformed code. We need your input and partnership to get tax reform over the finish line.” We’ve held more than 30 hearings and heard from hundreds of experts on reforming the tax code,” the Senators write in a letter to their colleagues. “Over the past three years, the Finance Committee has been working hard on tax reform on a bipartisan basis. WASHINGTON – Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Orrin Hatch (R-Utah) today proposed a “blank-slate” approach as a legislative starting point for tax reform and called on Senate colleagues to provide proposals for tax expenditures to add back and improve in a reformed tax code. Antonia Ferrier (Hatch): 20 Baucus, Hatch Urge Colleagues to Provide Input on Tax Reform Finance Leaders Take “Blank-Slate” Approach, Call for Ideas on What Expenditures to Keep and Improve in Code