Ryan Introduces FY 2014 Budget ProposalMarch 13, 2013
On Tuesday, March 12, House Budget Committee Chairman Paul Ryan (R-Wis.) released his proposed FY 2014 budget resolution that calls for comprehensive business and individual tax reform and seeks to eliminate $4.6 trillion in projected federal deficits through spending cuts to achieve a balanced budget by FY 2023.
The key goals for tax reform listed in the proposed House budget resolution include proposals to:
- Simplify the tax code
- Consolidate the current six individual tax brackets into two brackets of 10 and 25 percent
- Repeal the Alternative Minimum Tax
- Reduce the corporate tax rate to 25 percent
- Shift from a “worldwide” system of taxation to a “territorial” tax system
- Broaden the tax base to maintain revenue growth at a level consistent with current tax policy and recent average revenue levels of between 18 and 19 percent of GDP
The draft House budget resolution includes proposals to balance the federal budget by FY 2023 by reducing future growth in federal spending on Medicare and other mandatory programs, repealing the Patient Protection and Affordable Care Act and by reducing existing caps on discretionary programs.
The budget assumes revenue levels resulting from individual income tax rates enacted as a result of the American Taxpayer Relief Act of 2012. The House budget plan does not include any proposals for additional tax increases but incorporates increased revenues from higher economic growth assumed to result from comprehensive tax reform legislation.
Meanwhile, Senate Budget Committee Chair Patty Murray (D-Wash.) is expected to release a proposed FY 2014 Senate budget resolution later this week. Chair Murray previously has stated that she expects the Senate budget resolution to call for a “balanced” mix of revenue increases resulting from tax reform, reportedly up to $1 trillion, and spending reductions to reduce projected federal deficits.
The House and Senate are expected to vote on their respective proposed budget resolutions next week. Congressional budget resolutions, which are not subject to signature or veto by the President, set the expected budget levels for discretionary spending, mandatory spending, and revenues for the federal government.
The administration has delayed the submission of the President’s FY 2014 budget until late March or early April. The President’s budget is expected to call for increased revenues and spending reductions to reduce, but not eliminate, future projected federal budget deficits. In addition, the President’s budget is expected to re-propose certain business and individual tax increase provisions featured in previous budgets.
The outlook for comprehensive tax reform legislation is expected to be influenced by whether the House and Senate can resolve differences over budget policy. President Obama has been meeting separately with Congressional Republicans and Democrats but the prospects for a “grand bargain” on revenues and spending remain uncertain at this time.