Aug. 2 (Bloomberg) -- The House of Representatives voted to set up a fast-track process for overhauling the U.S. tax code in 2013.
The Republican plan, passed 232-189, would remove some procedural hurdles and set parameters for the tax law. The measure has little chance of advancing in the Democratic-controlled Senate, and the White House has threatened a veto.
The House bill would reduce the top individual and corporate tax rates to 25 percent from 35 percent and curtail tax breaks. It would pare the six individual brackets to two. The alternative minimum tax would be abolished and companies would face lighter taxes on income earned outside the U.S.
“When paired with appropriate government spending cuts, comprehensive tax reform that includes these policies could lead to the creation of 1 million American jobs in the first year alone,” Representative Dave Camp, a Michigan Republican and chairman of the House Ways and Means Committee, said during debate today.
Republicans voted a day after passing a one-year extension of the George W. Bush-era income tax cuts, scheduled to expire at the end of this year, for all income levels. Senate Democrats and President Barack Obama want to allow the tax cuts for top earners to expire.
All Democrats and three Republicans voted against the bill. Those Republicans are Walter Jones of North Carolina, Ron Paul of Texas and Chris Gibson of New York.
House Republicans such as Peter Roskam of Illinois say the party is trying to demonstrate progress toward a tax-code rewrite to first-term lawmakers eager for faster action. The two House tax bills will be tied together and sent to the Senate, linking the fast-track process to the tax-cut extension.
Because the bill passed today calls for reducing rates and limiting tax revenue to 19 percent of gross domestic product, Democrats say it would cause the U.S. tax burden to be shifted from top earners to middle-income taxpayers.
House Democratic leader Nancy Pelosi said the House Republican tax-overhaul proposal would exceed the “greatest extraction of wealth from the middle class up to the high end” enacted by the Bush-era income tax cuts.
“What it does to the middle class and what it does to millionaires, it’s stunning,” Pelosi of California told reporters. “It almost has an immorality to it.”
The fast-track procedure would let the minority in the Senate insist on a 60-vote threshold before a final vote. Congress could also amend the bill.
The bill is H.R. 6169.
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