Political jockeying over the fiscal 2013 federal budget began in earnest Tuesday as House Republicans unveiled their budget proposal, which features a lower corporate tax rate, fewer individual tax preferences and major reforms for social programs like Social Security and Medicare.
The plan, unveiled by House Budget Committee Chairman Paul Ryan, R-Wis., also calls for a 20% reduction of federal employees. Federal employees also would have to contribute more to their pension plans and sustain pay freezes through 2015.
On taxes, the Republican plan did not address specific exemptions, unlike the budget President Barack Obama sent to Congress on Feb. 13, which would eliminate the carried interest deduction and raise the dividend tax rate while shrinking itemized deductions like mortgage interest.
The president's plan would also trim to 28% from 35% the exclusion for retirement plan contributions and the deduction for IRA contribution for taxpayers with adjusted gross income of more than $250,000 if married or $200,000 if single.
The House Republicans want to lower the corporate tax rate to 25% from 35% and remove “special-interest loopholes … disproportionately used by upper-income individuals.” No specifics are given.
The House budget panel plans to mark up its proposal on Wednesday despite slim prospects for final passage. Senate Budget Committee Chairman Kent Conrad, D-N.D., who filed a resolution Tuesday that sets federal spending levels for 2013, warned Republican leaders to honor a budget deal reached last year that features discretionary spending caps. “If the Republicans in the House abandon the deal we made in August, it will make it very difficult for House and Senate Appropriations committees to fulfill our duties,” Mr. Conrad said in a news release.
