House Republicans introduced a 10-page document outlining their “Plan for America’s Job Creators Agenda,” including lowering the top tax rate for businesses and individuals from 35 to 25 percent and reforming the Tax Code to encourage U.S.-based businesses to repatriate their overseas profits.
“We understand that it’s important for us—to grow the economy, not just to see Washington grow—to see small businesses flourish,” said House Majority Leader Eric Cantor, R-Va. “Now more than ever, our nation needs small businesses and entrepreneurs to get people back to work.”
Democrats, however, countered that the Republican plan would inevitably raise taxes for much of the country.
“We need tax reform, not loose talk from Republicans about reducing the top individual rate to 25 percent and creating a $2.9 trillion budget hole in the process that could only be filled by eliminating an array of tax benefits that helped grow the middle class, such as the mortgage interest deduction and the exclusion for employer provided health care,” said Rep. Sander Levin, D-Mich., the ranking Democrat on the House Ways and Means Committee. “Republicans, meanwhile, insist on massive tax cuts for the wealthiest Americans and continuing subsidies for big oil companies.”
Rep. Lloyd Doggett, D-Texas, another member of the House Ways and Means Committee, also derided the plan, pointing to a Joint Committee on Taxation estimate that the proposal to repeal the tax on repatriated foreign profits would cost $78.7 billion.
“The Republican tax plan is designed to create jobs in China, not in America,” said Doggett. “Profits of companies that move jobs to China would be tax free here, while profits of companies that invest in America would be taxed. And Republicans demand that the cash those corporations have already stashed in tax havens be taxed at a mere 5 percent—representing a windfall for corporate tax dodgers that will cost almost $80 billion. Nor do they specify any of the 'special interest tax breaks,' previously adopted at the urging of these same corporate interests, that they would finally close. Our tax policy should encourage job creation here, not more export of jobs there.”
He also noted that the last time a tax holiday on repatriated corporate profits was tried, back in 2004 when corporations were allowed to pay a reduced rate of 5.25 percent, companies used much of the money to buy back their own stock or issue dividends, rather than using the money to create new jobs in the U.S. The Republican plan noted that $300 billion in profits were returned to the U.S.
The Republican plan also calls for ratifying the free trade agreements with Colombia, Panama and South Korea, and streamlining the patent system to discourage "frivolous lawsuits."
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