Tax Reform

By Lori Montgomery
Tuesday, February 25, 2014

The long-awaited simplification of the tax code being drafted by House Republicans would slash the top income tax rate to 25 percent from 39.6 percent and impose a surtax on some of the nation’s wealthiest households.

Under the proposal, set for release Wednesday, the vast majority of taxpayers would see little change in the ultimate size of their tax bills, according to a nonpartisan congressional analysis of the legislation.

But the tax system would be dramatically simpler, with seven existing brackets collapsed into just two, set at 10 percent and 25 percent.

In addition, the plan would impose a 10 percent surtax on certain types of earned income over roughly $450,000 a year. The surtax would hit many salaried professionals, such as attorneys and accountants, while dodging farmers and manufacturers — as well as the super-rich, whose income often is derived primarily from interest and investments.

The analysis by the congressional Joint Committee on Taxation, reviewed by The Washington Post, does not indicate which of the hundreds of tax breaks that litter the code would be sacrificed to clear the way for the lower rates.

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