They are on the right track in proposing a lower corporate tax rate of 25 percent and unlimited first-year write-off (expensing) of all new investment.
But they timidly propose to replace the current seven personal income tax rates (10, 15, 25, 28, 33, 35, and 39.6 percent) with two of 15 and 35 percent. President Reagan’s Tax Reform Act of 1986 replaced a bevy of marginal tax rates peaking at 50 percent with two rates of 15 and 28 percent.
After twenty-nine years the best these two pro-growth Republican senators can do is add seven percentage points on Reagan’s top marginal rate. Even the Democrat Bradley-Gephardt plan of 1986, which proposed three rates of 14, 26, and 30 percent, was more audacious.