* Republicans propose two tax brackets - 10 pct, 25 pct
* No taxation of U.S. company overseas profits sought
* Plan seen contrasting with Obama, deflect Medicare
WASHINGTON, March 19 A much-anticipated budget
plan due on Tuesday from Republicans in the U.S. House of
Representatives includes sweeping tax reforms that cut rates and
pare down individual income tax brackets from six to two - 10
percent and 25 percent.
The plan, which aims to deflect potential fallout from
controversial Medicare reforms ahead of November elections, also
would nearly eliminate U.S. taxes on overseas profits and reduce
the domestic corporate tax rate to 25 percent.
Even though the plan has almost no chance of becoming law,
Republican lawmakers believe that focusing on tax reform will
draw a stark contrast with Democratic President Barack Obama's
budget plan and be popular with voters.
"We wanted to put a very clear jobs message into the
budget," House Ways and Means Committee Chairman D ave Camp told
"This really sets a contrast between us and what the
administration is trying to do. They want to raise taxes. We
want to grow our economy, simplify our tax code and make it
fairer," Camp said.
The plan also would end the Alternative Minimum Tax, which
was originally aimed at the wealthy but increasingly threatens
to ensnare more middle-class taxpayers because it was never
indexed for inflation.
Camp and House Budget Committee Chairman Paul Ryan, who is
to unveil the budget plan on Tuesday, first released the details
of their tax plan in a Wall Street Journal interview published
late on Monday.
They did not release details of how the budget plan will
reform Medicare, the popular but increasingly expensive health
care program for the elderly. Ryan last year proposed to change
traditional fee-for-service Medicare into a voucher-like system
that allowed beneficiaries to purchase private health insurance.
In a slick YouTube video previewing his budget, Ryan said
only that "real, specific reform is needed to strengthen the
health and retirement security of seniors."
"Our plan includes no changes for those in or near
retirement and, instead of government bureaucrats, puts patients
in control of their health care decisions," Ryan said.
SPENDING CAP DISPUTE
The lawmakers in the interview also did not include details
on cuts to government agency budgets and other discretionary
programs that House Republicans have been arguing over for the
Conservative members wanted to go as much as $116 billion
below a $1.047 trillion spending cap agreed with Democrats last
August, but Republican aides said the budget contains a more
modest $19 billion reduction. Some conservatives, including
those supported by the Tea Party movement, may still balk at
Republican congressman Tom Cole, a member of the House
Budget and Appropriations committees, said the Ryan budget has
sufficient support for House approval if is not altered through
"If the budget that Ryan introduces is kept intact, it will
pass the Committee and the House," Cole said. "This is a finely
crafted compromise that all parts of the Republican conference
need to support if they want to actually pass a budget."
But Democrats, who see the reduced discretionary spending
levels as breaking the debt-limit deal, have warned that it
could play havoc with spending bills and again threaten a
government shutdown later this year.
(Reporting By David Lawder, Donna Smith and Richard Cowan.
Editing by Christopher Wilson)