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The Congress shall have power to lay and collect taxes on incomes is the text of Amendment 16.
AZUZ: U.S. Tax Code has changed a lot since that amendment was ratified in 1913. And though many lawmakers and economists agree, it's very complicated today, tax reform is not an easy thing to achieve. The last time it happened was in 1986.
This week, the Trump administration revealed a Republican proposal that it says would both reduce taxes and simplify the tax code. The nine-page plan is called the United Framework for Fixing Our Broken Tax Code. And one way it could simplify taxes in America is by reducing the number of income tax brackets there are.
In general, the more money Americans earn, the higher a percentage of that money they pay in taxes. The Republican plan would reduce the number of tax brackets from seven to three and lower the percentages that many Americans pay. It would increase the amount of money that people could deduct from their taxes, potentially paying less. It would increase the child tax credit, so Americans with children would pay less. And it would reduce the U.S. corporate tax rate from 35 percent to 20 percent, so business would pay less.
The proposal does not include some key details, like specifics income levels for the new tax brackets. Its supporters, including House Speaker Paul Ryan say the plan would help the economy, that the lower tax rate for businesses would allow them to hire more people and increase wages and that improved economic growth would mean more revenue for the government.
Income taxes make up the largest source of government revenue, about 47 percent of it, and critics say tax cuts would mean less government revenue and a greater deficit. And while President Trump has said he doesn't support tax breaks for the wealthy, congressional Democrats like Senator Chuck Schumer say that's who the plan would benefit, while hurting the middle class.
The Trump administration hopes to push its tax reform plan through Congress by the end of the year.
