Rep. Jim Renacci, R-Ohio, a CPA who joined Congress in 2011, has released a tax reform plan only weeks after House Republican leaders unveiled their own.
Renacci’s Simplifying America’s Tax System, or SATS, plan would eliminate the corporate income tax and replace it with a single-digit consumption tax on business activities, subjecting all business income to one level of income taxation. On the individual side, his SATS plan would reduce income tax rates for taxpayers by significantly increasing the standard deduction. A family of four would have no income tax liability on income up to $50,000. SATS would also eliminate the marriage penalty and expand the Earned Income Tax Credit.
“We need to tear down the wall of corporate level taxation and jump start our economy with a much needed overhaul,” Renacci said in a statement Thursday. “SATS is a bold pro-growth solution to business tax reform that would make our tax system the most competitive in the world. It would also lower rates across the board so that Americans of all income levels will see a similar increase in after-tax income. Your success should be up to you, not the tax code.”
Last month, House Speaker Paul Ryan, R-Wis., and other House Republican leaders released their own tax reform plan, which would reduce the corporate income tax rate to 20 percent and also expand the standard deduction for individual taxpayers (see Ryan Tax Plan Cuts Corporate Rate to 20% to Stem Inversions).
Meanwhile, Donald Trump, the presumptive Republican nominee, has a separate tax plan that eliminates the income tax for single taxpayers who earn less than $25,000 and married couples who earn less than $50,000. Trump’s tax plan has four tax brackets of 0, 10, 20 and 25 percent instead of the current seven brackets. No business would pay more than 15 percent of its income in taxes under his plan.
The Tax Foundation has released an analysis of Renacci’s tax plan, concluding, “Rep. Jim Renacci’s tax plan would reform the individual income tax and replace the corporate income tax with a credit-invoice value-added tax. If enacted, his plan would reduce federal revenues by $845 billion over the next decade. The Renacci plan would significantly reduce marginal tax rates on capital and labor income, which would result in a substantial increase of the size of the U.S. economy in the long run. This would increase the revenue that the tax plan would ultimately collect, making the plan slightly revenue positive. Rep. Renacci’s plan would increase after-tax incomes for taxpayers at all income levels.”
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