WASHINGTON (Bloomberg) — Two senators proposed a bipartisan overhaul of the tax code that would reduce the top US corporate tax rate to 24 percent from 35 percent in exchange for eliminating special breaks.

Oregon Democrat Ron Wyden and New Hampshire Republican Judd Gregg yesterday also proposed creating three tax rates for individuals, topping out at 35 percent. They would repeal the alternative minimum tax and exempt the first 35 percent of capital gains and dividends from taxes. Wyden serves on the tax- writing Finance Committee and Gregg is the top Republican on the Budget Committee.

The proposal is the first major tax-overhaul plan since House Ways and Means Committee Chairman Charles Rangel of New York advocated reducing the 35 percent corporate tax rate to 28 percent in 2007. Wyden and Gregg would end the ability of US- based multinational corporations to defer US taxes on their foreign profits indefinitely.

Rangel and Finance Committee chairman Max Baucus, a Montana Democrat, have said they want to tackle a tax overhaul, and a presidential panel led by adviser Paul Volcker is preparing its own report on the subject.

"By simplifying the tax code and scaling back tax breaks for special interests, we can give everyone an opportunity to get ahead," Wyden said in a statement. "Businesses of all sizes will be in a better position to compete and grow jobs."

Wyden said his bill would almost triple the standard deduction and reduce taxes for most Americans earning less than $200,000. It would preserve deductions for mortgage interest, charitable contributions and child tax credits.

The plan, while excluding the first 35 percent of capital gains from taxes, would treat the rest as ordinary income. It would shorten the holding period necessary to gain preferential tax treatment of capital gains to six months from one year for the first $500,000 of capital-gains income.

"A key element to this proposal is a flat 24 percent corporate tax rate to ensure our competiveness in the global market and create jobs in America," Gregg said in the statement.