House Ways and Means Committee Chairman Dave Camp (R-MI) has put forth his version of tax reform. It is a massive proposal of 976 pages of legislative language in a “draft form”. The proposal is accompanied by a slew of analysis and explanation by the Joint Committee on Taxation.
The Camp proposal is a wonderful piece of work. It contains many, many good ideas.
The tax system needs a complete overhaul. To that there can be no question. Simpler, more fair, less picking winners and losers. Mr. Camp wants to eliminate and modify a number of current tax provisions to reduce the statutory corporate tax rate to 25% and establish two individual tax rates of 10% and 25% with 10% surtax on individual incomes apply on incomes exceeding $450,000 for joint filers.
In order to achieve the reduction in the corporate tax rate changes include replacement of the modified accelerated cost recovery system with a system for longer recoveries, repeal of the deduction for income attributable to domestic production activities, and elimination or modification of many useless business tax credits, deductions, and accounting methods. Individuals would see their tax base broadened with also many deductions gone, limited or curtailed. Mr. Camp’s goal seems to drastically reduce the number of taxpayers that itemize.
I do not agree with everything. For example I think there is a lack of understanding on some of the energy provisions. However, The best parts of the plan are contained in the sections which have the word repealed. Many special provisions, tax favors, special interest features that skew econmic decision-making would be gone.
I am not going to present an explanation of the proposal. Future writing will focus in on some of the specifics.
It is doubtful Camp’s plan will be seriously considered in Congress this year. The House leadership is paying lip service to the proposal and has never been even half behind tax reform. Comments from Senate Democratic and Republican leaders clearly indicate tax reform is not on the agenda this year. The Administration has no interest in tax reform; it cares only about raising taxes and wealth redistribution schemes.
The beauty of the Camp plan is that it takes on all the sacred cows. While politicians and lobbyist have lauded his effort, the fact remains that no one with a tax goodie is likely to go quietly into the night.
In any event, great effort from Mr. Camp. Perhaps, this effort will sow the seeds for a harvest at another time. Perhaps not, as small-minded, avaricious interests continue to rule the day.