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A new version of the plan, obtained by The Associated Press on Tuesday, makes mostly minor changes to a draft that whipped up enormous controversy when unveiled earlier this month. Some domestic spending cuts are modestly higher than previously proposed, and health care savings from overhauling the medical malpractice system would reap less than proposed earlier this month.
Unlike their original proposal, Bowles and Simpson stop short of calling for caps on medical malpractice awards. Instead they recommend changes in how awards are made.
But other proposals remain the same. Among them are a gradual increase in the Social Security retirement age to 68 by 2050 and 69 by 2075, using a less generous cost-of-living adjustment for the programs and increasing the cap on income subject to Social Security taxes.
The plan also retains a 15-cent-a-gallon increase on gasoline, a three-year freeze on federal worker pay and the elimination of 200,000 workers from the federal payroll through attrition.
The proposal obtained by the AP was a draft that was still undergoing changes Tuesday evening.
Other recommendations:
-- Eliminate congressional pet spending projects known as "earmarks."
-- Reduce the corporate income tax rate to 28 percent from 35 percent and stop taxing the overseas profits of U.S.-based multinational corporations.
-- Overhaul individual income taxes and corporate taxes, giving Congress the choice of reducing the top rate to as low as 23 percent and no higher than 29 percent. The lower the rate, the fewer the tax credits and deductions that would be available to taxpayers.
Under one scenario proposed by Bowles and Simpson, taxpayers would face three tax brackets of 12 percent, 21 percent and 28 percent. Taxpayers would still be able to claim an earned income tax credit and child tax credit as well as all standard deductions and exemptions. Capital gains and dividends would be taxed at ordinary income tax rates. Taxpayers could claim a mortgage interest deduction up to $500,000, but only on their primary residence.
If Congress does not undertake a comprehensive overhaul of the tax system by 2013, the plan calls for a "fail-safe" provision that would trigger across-the-board reductions in tax breaks, designed to raise revenue by $80 billion in 2015 and $180 billion in 2020.
Social Security cuts are part of deficit plan | cleveland.com
I am not a huge fan of increasing the retirement age under Social Security. I would rather tax all income for Social Security purposes (at present, we do not tax income above a certain level, more or less $108,000.) I would also be more interested in eliminating Social Security benefits for wealthier taxpayers than in increasing the retirement age.
What say you?