Originally published in the Wall Street Journal

Too many Americans believe the American dream is slipping away for them and their children. They see their cost of living rise while their paychecks remain stagnant. They see an economy that benefits stockbrokers but not stock clerks. They see the ladder of economic opportunity being pulled farther up and out of their reach.

This isn't the result of a mere cyclical downturn in the U.S. economy, but rather a fundamental transformation. In recent years, old industries have fallen, new ones have risen, the skills required for high-paying jobs have evolved, and the competition at all levels is increasingly global.

Despite these dramatic changes, the policies and practices of Washington remain stuck in the 20th century, leaving too many Americans unable to access the enormous potential of this new era.

If we hope to realize a new American Century, many institutions and government programs will need to be updated, reformed or replaced. Both of us have spent a large portion of the year proposing such reforms.

Perhaps no function of the U.S. government is more antiquated and dysfunctional than its tax system, so we are joining together to propose a federal tax-reform plan that will remove obstacles to investment, innovation, growth and opportunity.

The current tax code taxes too much, taxes unfairly, and conspires with our outmoded welfare system to trap poor families in poverty, rather than facilitate their climb into the middle class. Our reforms seek to simplify the structure and lower rates. How? By consolidating the many existing income tax brackets into two simple brackets—15% and 35%—and eliminating or reforming deductions, especially those that disproportionately benefit the privileged few at everyone else's expense.

In addition, our plan would eliminate the well-known marriage penalty, which imposes higher taxes on married couples than if they had filed individually. It would also take aim at another pernicious distortion—the parent tax penalty—that is more prevalent, if less understood, even by its victims.

Today, parents are, in effect, double charged for the federal senior entitlement programs. They of course pay payroll taxes, like everyone else. But unlike adults without children, they also shoulder the financial burden of raising the next generation of taxpayers, who will grow up to fund the Social Security and Medicare benefits of all future seniors.

This hidden, double burden on parents isn't offset anywhere else in the system, and so true conservative tax reform needs to account for it. Children aren't consumer goods—they are investments parents make in their futures, and in the future of America, and therefore deserve to be treated as such in our tax code.

Our proposal would account for this and level the playing field for working parents by augmenting the current child tax credit of $1,000 with an additional $2,500 credit, applicable against income taxes and payroll taxes—i.e., the taxes that most burden lower- and middle-income families. The credit would not phase out, and would be refundable against income tax and employer and employee payroll tax liability.

Some conservatives we respect wonder if such tax relief for families would do enough to promote growth. But it bears remembering that the end goal of economic policy isn't simply growth, but freedom—clearing the obstacles from each American's unique pursuit of happiness. Millions of Americans up and down the income scale choose to invest their personal economic freedom in children and not just in commerce—in human and social capital rather than just financial capital. We believe it is wrong to punish such a choice.

Our plan would also ensure that our tax code works together with the federal welfare system, so that low-income workers are able to climb into the middle class without having to overcome 80%-100% effective marginal tax rates. Often when a worker gets a modest pay raise, higher taxes and lost benefits conspire to leave the person with little extra money in their pocket. Ending this unfortunate reality will involve retooling the Earned Income Tax Credit in coordination with means-tested programs to create a welfare system that works better and removes poverty traps.

Our reforms would help spur growth where today's tax code obstructs it. On the business side, we would cut the current 35% corporate tax rate to make it competitive in the global economy. The exact rate will be determined as we continue to shape the legislation, but it must be low enough to end the problem of corporate inversions and the loss of American jobs to other nations. We will also allow companies large and small to deduct their expenses and capital investments while integrating all forms of business taxation into a consolidated, single-layer tax.

These reforms would eliminate double-taxation on investment, and enable small businesses and startups to compete on a more level playing field against entrenched incumbents, who for too long have profited from the cronyist giveaways our plan would eliminate.

We will also propose that businesses only be taxed in the country where income is actually earned, rather than double-taxed when the money is brought back home. The way to reverse corporate inversions and bring capital in off the sidelines isn't to punish companies for obeying outmoded laws, but to change those laws to make America once again the best place in the world to pursue happiness and earn success.

In sum, our proposal would make it easier for Americans to find jobs and easier for businesses to create them. It would help restore upward mobility at the bottom of our economy and fair competition at the top. And it would restore equal opportunity to working parents, America's ultimate investor class.

If Republicans win the Senate this fall, passing pro-family, pro-growth tax reform should be a cornerstone of our agenda next year. The plan we have outlined won't only help revive the American dream, but also make it more attainable for more Americans than ever before.

Messrs. Lee and Rubio, both Republicans, are U.S. senators from Utah and Florida respectively.