“The Treasury should work with Congress to simplify the tax code by enacting a simple two-rate individual tax system of 15 percent and 30 percent that eliminates most deductions, credits and exclusions. The 30 percent bracket should begin at or near the Social Security wage base to ensure the combined income and payroll tax structure acts as a nearly flat tax on wage income beyond the standard deduction. The corporate income tax rate should be reduced to 18 percent.”
Citation: Project 2025, Section 4.2: Department of the Treasury, William L. Walton, Stephen Moore, and David R. Burton, page 728, paragraph 5
Context:
Specifically, Project 2025’s tax reform plan would:
- Enact a two-income tax bracket system that would raise taxes by $3,000 for the median family of four—which makes about $110,000 a year—and raise taxes by $950 for the typical single-person household, which makes about $40,000 a year. (see Appendix for state-specific data)
- Provide an average $1.5–2.4 million tax cut for the 45,000 U.S. households making more than $10 million annually from the combination of the “two-bracket” system and cuts to taxes on the wealthy’s investment income.
- Cut the corporate tax rate to 18 percent, which amounts to a $24 billion tax cut for the Fortune 100.
- Replace all individual and corporate income taxes with a consumption tax in the long term. This could take the form of a value-added tax well above 45 percent, which would produce an enormous one-time burst of inflation and raise prices.
The shift toward a flat consumption tax while eliminating income taxes would lead to an average $5,900 tax increase for the middle 20 percent of households and an average $2 million tax cut for the top 0.1 percent. [Source]
Full contextual analysis of Section 4.2: Department of the Treasury here.
Categories: Taxes