Panel Weighs Deep Cuts in Tax Breaks and Spending

JACKIE CALMES published a new article Panel Weigns Deep Cuts in Tax Breaks and Spending on New York Times on November 10, 2010.

The chairman of Obama's bipartisan commission on reducing the national debt outlined a politically provocative and economically ambitious package of spending cuts and tax increases on Wednesday. The plan calls for deep cuts in domestic and military spending, a gradual 15-cents-a-gallon increase in the federal gasoline tax. Their outline will be the basis for negotiation within the commission, which has a Dec. 1 deadline for submitting a final plan. The plan has many elements with the potential to draw intense political fire.

The plan would reduce cost-of-living increases for all federal programs, including Social Security. In five hours of deliberations on Wednesday, the commission did not discuss the plan's particulars much but instead talked at length about whether a lame-duck Congress would have time to write specific legislation and then vote, members said in interviews. Their proposed simplification of the tax code would repeal or modify a number of popular tax breaks -- including the deductibility of mortgage interest payments -- so that income tax rates could be reduced across the board. Under one option, individual income tax rates would decline to as low as 8 percent for the lowest income bracket (it is now 10 percent) and to 23 percent for the highest bracket (now 35 percent). The corporate tax rate, now 35 percent, would be reduced to as low as 26 percent.

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Posted by Yi Song, Associate Editor, Wealth Strategies Journal.