What is the Rubio-Lee Plan?

The plan—officially titled the “Economic Growth and Family Fairness Tax Plan”—is a white paper in which Senators Marco Rubio (R-Florida) and Mike Lee (R-Utah) lay out a tax reform proposal they believes will “resolve these major problems in the tax code.”

What’s in the plan?

The plan has two main sections, one “pro-growth” and one “pro-family.” The pro-growth side of the plan includes seven mended changes:

Full expensing for all businessesCreating parity on the taxation of business eElimination of extraneous business tax provisionsElimination of interest from tax baseTransition to an international dividend exemption systemCarryover of losses and transitionsReforming the treatment of health care in the tax code

The pro-family side has four proposed changes to the tax code:

Tax bracket and filing status consolidationChild tax credit consolidation and enhancementConsolidation of filing systemEnding high effective marginal tax rates for the poor

What are some specifics of the plan?

The plan would simply tax code structure and lower rates by consolidating the numerous existing e tax brackets into two simple brackets—15 percent and 35 percent. Individuals earning up to $75,000 or married couples making up to $150,000 would pay 15 percent, and the 35 percent top rate would apply for everyone above that line. (The current top rate is 39.6 percent.)

The plan would also eliminate or reform deductions (sparing only mortgage interest and charitable contribution deductions), including an elimination of the marriage penalty, which imposes higher taxes on married couples than if they had filed individually. A new $2,500 child tax credit, applicable to payroll tax liabilities as well as for the e tax, would be included.

On the business side, the proposal eliminates double taxation on all business e. The Senators also would mend that businesses only be taxed in the country where e is actually earned, rather than double-taxed when the money is brought back home.

How much would the plan cost?

Estimates are that implementing the plan would mean a reduction in federal tax revenues of $4 trillion over ten years. However, if the intended effects of economic growth are taken into account the cost could be about $2 trillion. So unless the plan is coupled with spending reductions, the result would be an additional $2-4 trillion added to the deficit over a decade.

What is the likelihood the plan will be adopted?

Slim to none. Neither senator is a member of the tax-writing Senate Finance Committee, which is currently involved in a tax reform effort with working groups focusing on specific parts of the tax code. They can mend the plan to their colleagues, but there is no chance that it will be adopted wholesale. And if it were to get through Congress, President Obama would surely veto the plan.

Still, the white paper shows what tax reform (at least fromGOP) will look like when it e. As Ryan Ellis of Americans for Tax Reform says, the Rubio-Lee plan is “what pro-growth looks like in the 21st century.”