This week, the Republican Study Committee released its FY 2014 budget plan which tackles the federal government’s mounting debt without raising taxes. By focusing on cutting spending, the plan will balance the budget by 2017 and provides an outline for reforming the growing pressures of entitlement programs and big government spending.
The RSC budget transforms the U.S. tax system for the 21st century. It would create an optional personal income tax structure far simpler than the current one. This system would feature only two tax rates with a top rate of 25 percent, a generous family exemption (families of four pay no income tax on their first $50,000 of income), and no other deductions or credits. It cuts investment taxation to 15 percent and indexes capital gains to inflation. Those wishing to could remain in the current system.
The RSC budget also lowers the world’s highest corporate income tax rate to 25 percent while enacting a territorial tax system with repatriation. It kills the death tax and ends the marriage penalty. It repeals all $1 trillion in Obamacare tax hikes by repurposing them for comprehensive tax reform.
The budget rolls spending back to its pre-“stimulus,” pre-Obamacare levels and freezes outlays until the budget reaches balance in 2017. After nearly five years of failed spending programs, this forces lawmakers to start prioritizing scarce tax dollars.
The plan repeals the $1.2 trillion in new Obamacare spending and saves Medicare from looming bankruptcy due to skyrocketing healthcare costs and unstable demographic pressures. The RSC budget adopts the commonsense reforms proposed in the House Conference budget that puts patients, not bureaucrats, in charge of their health care decisions.
The budget will put states in charge of Medicaid. The plan empowers local officials to efficiently use tax dollars to aid their communities, releasing policymakers from the strings attached to federal control. The proposal applies the successful model from the 1990s of block granting welfare reform to food stamp programs.
The RSC budget makes changes to strengthen Social Security and reform the program for today’s demands. The plan will adjust the formula by which benefits are calculated, offering more realistic projections for the program’s long term costs. The plan also proposes a gradual increase in the retirement age to accurately reflect modern life expectancies.
This is a conservative blueprint for the reforms that are necessary for lasting American prosperity. Just as the House Conference Budget does, the RSC budget affirms that when lawmakers are willing to do the hard work, the budget can and should be balanced without punishing taxpayers for Washington’s spending addiction.