GOP senator seeks tax reform for families

With that in mind, Lee is proposing a dramatic overhaul that would strip the tax code of most of its current preferences, and install a new $2,500 per child credit for parents.

In a break from his fellow Republicans, Lee also calls for reducing the current top tax rate to only 35 percent – the same level it was until early this year, when the fiscal cliff deal eliminated George W. Bush-era rates for the highest earners.

Top congressional Republicans – including House Ways and Means Chairman Dave Camp (R-Mich.) – are pushing for a top rate of 25 percent. Leading congressional tax writers in both parties are still looking to rewrite the tax code this Congress, at a time when Washington is increasingly becoming fixated on a pair of looming fiscal fights.

Sen. Orrin Hatch (Utah) – who Lee declined to endorse in a home state primary last year – is currently the top Republican on the Finance panel.

Lee, who does not have a slot on that committee, said he agrees that a 35 percent rate is still too high, but that he “put off further cuts in this proposal in order to focus attention on the parent tax penalty.” The proposal does not deal with the corporate side of the tax code, either.

Lee’s plan would install only two brackets, with single taxpayers making up to $87,850 and married couples bringing in as much as $175,700 paying 15 percent.

The Utah Republican would keep current tax incentives for children, and drastically rewrite current tax breaks for home ownership and charitable giving. A $2,000 personal credit would be available instead of the personal exemption and the standard deduction.

Under the proposal, the charitable deduction would be available to all taxpayers, not just the roughly third of taxpayers who itemize.

The mortgage interest deduction would also be capped at $300,000, far less than the current $1 million threshold. Lee would also repeal both the Alternative Minimum Tax, the taxes funding President Obama’s healthcare law and the deduction for state-and-local taxes – a provision that generally favors residents of Democratic states.

Lee has helped lead the charge in the Senate to defund the health law, saying he will oppose any government spending measure that helps fund ObamaCare.

On Tuesday, he also said that his tax plan would illustrate that the current set-up gives a leg up to corporations and special interests, and brushed aside expected criticism that he, too, was picking winners and losers.

“Like everyone in this room, I hope, I oppose rigging policy to unfairly favor any group – even middle-aged, Mormon, constitutional lawyers,” Lee said.

He added that his bill “challenges the Republican Party to recognize that most Americans’ most important investments mature much more slowly than bonds. Especially the boys.”