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Senators Marco Rubio (R-Fla.) and Mike Lee (R-Utah) have introduced a tax reform plan which aims to be simultaneously pro-growth, pro-family, and much more simple than the current tax mess.  Here are the major components:

Business tax rate of 25 percent.  The corporate income tax rate is reduced from 35 to 25 percent.  The top income tax rate for “pass through” or “flow through” firms like Subchapter-S corporations, partnerships, LLCs and sole proprietorships would fall from 39.6 percent to 25 percent.  All businesses face the same income tax rate.

Zero percent tax rate on capital gains, dividends, and interest.  The plan reduces the regular tax rate on capital gains and dividends from 20 percent today to 0 percent.  Interest would also face a 0 percent tax rate (though interest is no longer deductible for businesses), meaning that all savings—even in taxable brokerage accounts and deposit accounts—would benefit from tax free growth.  All savings would work much like Roth IRAs do today.

Top personal rate cut to pre-Obama levels.  The top personal income tax rate would be reduced from 39.6 percent to 35 percent.  Exceptions obviously apply for business income (25 percent) and savings income (0 percent).

Simple two-bracket tax system.  The first $150,000 of taxable income for married couples (half this for singles) would face tax at a 15 percent rate.  All income earned above these levels face tax at a 35 percent rate.  But see the business/investment exception rates above.

Full business expensing.  All business capital investments—including equipment, building, inventories, and land—would be immediately and fully deductible from taxable income.  This would replace our current slow, multi-year deduction regime known as “depreciation.”  All investments are deducted the year the cash is actually spent.

Moving from worldwide to territorial taxation.  Any money repatriated from overseas (where it has already faced local taxation) would see no additional tax from the IRS.  To help finance this, a special 6 percent one-time tax (paid over a decade) is assessed on current overseas profits.

Kills the death tax. The plan fully eliminates the death tax.

Pro-family tax reforms.  Creates a new $2500 child tax credit (on top of the current $1000 one) creditable to both income tax and payroll tax liability.  No more marriage penalty.

Simplicity.  Two brackets for individuals. The AMT is repealed.  The standard deduction is repealed and replaced by a $4000 tax credit for couples (half that for singles).  Only mortgage interest and charitable contribution deductions remain (these can be taken in addition to the personal credit).  Most returns would be postcard-sized.