Bush tax plan takes swipe at Wall Street

Bush tax plan takes swipe at Wall Street
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Republican presidential candidate Jeb Bush proposes scrapping a tax break prized by Wall Street as part of a new plan that would sharply lower tax rates for both individuals and businesses. 

Bush, a former Florida governor, calls for dropping the corporate rate from 35 percent to 20 percent, a more aggressive approach than even congressional Republicans have outlined in recent years. 

Under the framework Bush outlined in The Wall Street Journal, the top individual rate would drop to 28 percent, where it stood after the last successful overhaul of the tax code nearly three decades ago. 

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Bush's plan received quick praise Tuesday from the GOP's business wing, which has long lobbied to cut the corporate tax rate. 

But in proposing to roll back the so-called carried interest incentive, Bush is also seeking to tap into the populist sentiments that have helped propel businessman Donald Trump to the top of the GOP polls. 

"The tax code is a labyrinth littered with thousands of special-interest giveaways, subsidies and other breaks written to favor Washington insiders," Bush wrote in his Journal op-ed, adding, "The code is rigged with multiple carve-outs for favored industries."

The carried interest tax break essentially allows private equity and hedge fund partners to count profits from managing money as capital gains, which is currently taxed at about half the top rate for ordinary income. Democrats have long pushed to tax carried interest at the individual rate, which currently tops out at 39.6 percent.

Trump has also made it clear that he thinks hedge fund managers pay far too little in taxes.

In all, Bush would install three individual tax rates — 10 percent, 25 percent and 28 percent. 

The candidate's op-ed leaves some central questions unanswered, including what affect his tax proposals would have on federal deficits.

But Bush does make it clear that he wants to lower taxes, get rid of the estate tax and protect at least some big-ticket incentives for both individuals and businesses.

For instance, Bush says he would still allow people to write off their charitable contributions and would allow businesses to immediately deduct their investments — a more generous policy than companies currently have. 

To offset the cost, Bush says he would eliminate most other corporate deductions. He also calls for taxing offshore corporate profits at an 8.75 percent rate and shielding future profits from U.S. taxation — ideas similar to what House Ways and Means Chairman Paul Ryan (R-Wis.) is currently trying to get into law.