Reports: GOP tax plan reduces individual rate to 25 percent

House Ways and Means Chairman Dave Camp’s plan to overhaul the tax code would reduce the top individual tax rate to 25 percent and cut effective rates on capital gains, according to media reports.

{mosads}Camp (R-Mich.) and House Republicans have for years said his goal was to slash the top individual rate – now at almost 40 percent – to 25 percent.

The Michigan Republican’s plan, expected Wednesday, accomplishes that objective in part by employing a 10 percent surtax on income above $450,000 for professions like lawyers and accountants, The Washington Post says.

According to The Post, Camp’s plan would only shift a small portion of the tax burden to lower-income taxpayers initially before evening out.

The Wall Street Journal says that Camp would eliminate the preferential rate for capital gains and dividends – now 20 percent – and tax them as ordinary income.

But 40 percent of that income would be excluded for tax purposes, giving many taxpayers an effective tax cut on those gains. The Journal added that a Joint Committee on Taxation analysis suggests that Camp’s plan could increase gross domestic product by as much as 1.6 percent over a decade.

Many of the tax incentives that would need to be slashed under Camp’s plan remain unknown.

Camp is releasing his plan this week after backing off a plan to mark up a tax reform bill last year, and still faces some skepticism from GOP leaders and the rank-and-file about moving forward on tax reform in an election year.

Releasing the plan amounts to a test to see if Camp can gain wide GOP backing for moving ahead on tax reform.