The GOPs hidden 46% tax bracket

House Republicans claim the tax plan they introduced Thursday keeps the top individual rate unchanged at 39.6 percent?the level at which it?s been capped for much of the past quarter-century. But a little-noticed provision effectively creates a new band in which income is taxed at over 45 percent.

Thanks to a quirky proposed surcharge, Americans who earn more than $1 million in taxable income would trigger an extra 6 percent tax on the next $200,000 they earn?a complicated change that effectively creates a new, unannounced tax bracket of 45.6 percent.

It hasn?t been advertised by Republicans, who have described their plan as maintaining the current top tax rate of 39.6 percent. And it goes against decades of GOP orthodoxy that raising taxes on the rich discourages work and reduces economic growth. Reached by phone, Steve Moore, a tax expert at The Heritage Foundation, said the surcharge was news to him. I was just in a briefing with the White House on this,? he said. They didn?t mention that. It seems kind of bizarre to me.?

The new rate stems from a provision in the bill intended to help the government recover, from the very wealthy, some of the benefits that lower-income taxpayers enjoy. Under the House GOP plan, all individuals?no matter whether they earn $35,000, $150,000 or $10 million?would pay the lowest rate, 12 percent, on their first $45,000 in taxable income. That?s a normal feature of current American tax law. But in the new plan, House Republicans want to claw back some of that benefit for individuals who earn more than $1 million, or couples earning more than $1.2 million.

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