Republican Rep. Dave Camp Proposes 'Simpler, Fairer Tax Code'
(CNSNews.com) - Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, says the debate about tax reform is over: 'We must enact real, meaningful tax reform to get this economy back on track."
On Wednesday, he announced a "simpler, fairer tax code" that would eliminate the need to itemize deductions for 95 percent of Americans.
Americans "have an obligation to debate the big issues of the day," Camp told reporters. "I put out this detailed discussion draft so we can engage the American people on this. And I think that this is something that, as I've traveled the country and through the hearings and all the meetings with folks I've had, this is something that people very much want to see move forward."
Camp's plan includes items that Republicans and Democrats both like and dislike, but the general reaction in Washington on Wednesday was, let's talk about it.
"The fact that Congressman Camp has put forward a proposal is a positive development," White House spokesman Josh Earnest said on Wednesday.
House Speaker John Boehner called Camp's plan "a discussion draft" that will begin the "conversation" on tax reform. "We all know our tax system is broken. We all know that it, frankly, gets in the way of economic growth. And we've talked about this and Chairman Camp's worked on this for years."
"Chairman Camp and his staff are to be commended for putting pen to paper to produce a detailed tax reform plan," said Americans for Tax Reform. "The Camp draft has many commendable elements, but other features are less compatible with a pro-growth model." ATR analyzes some of the pros and cons on its website.
Camp offered some details of his plan at a news conference:
"We flatten the tax code by reducing rates and collapsing today's seven brackets into two brackets of 10 (percent) and 25 percent for virtually all taxable income, ensuring that over 99 percent of taxpayers face maximum rates of 25 percent or less." He said the plan also reduces the corporate tax rate to 25 percent (from 35 percent), and it makes "commonsense reforms" such as increasing the standard deduction and the child tax credit.
"What that means is that 95 percent of the country no longer has to itemize," Camp said. "Now they can get the lowest possible tax bill just by filing the basic 1040 -- no more itemizing, no more keeping track of all those receipts and no more filling out all those extra schedules, forms and worksheets."
Camp's plan also eliminates "special special-interest handouts" and "hidden provisions that only benefit a favored few."
"We close a lot of loopholes, and we got a lot of -- a lot of the junk out of the code. Our plan repeals 228 sections of the tax code, and we cut the size of the income tax code by roughly 25 percent."
Camp wants to tax long-term capital gains and dividends as ordinary income, but exempt 40 percent of such income from tax.
His plan would completely repeal the Alternative Minimum Tax; consolidate education tax benefits; make the research and development tax credit permanent; and it imposes a new "bank tax" on financial services firms with more than $500 billion in assets. ("This new bank tax will come out in the wash in higher ATM fees, fatter commissions for stock brokers, and more nickel and dime-ing for average investors," Americans for Tax Reform said.)
The plan "generally leaves Obamacare policies untouched," Camp said.
Speaking with Fox News's Greta Van Susteren Wednesday night, Camp said his plan will grow the economy, create almost 2 million jobs, increase income for average families by $1,300 dollars a year, increase charitable giving by over $2 billion dollars a year. "So, it's -- it's a positive agenda. It's a pro-growth message. It actually gives our party something to talk about being for. But, yes, what we do is lower rates and do it by reforming the tax code to pay for them."
He admitted that "there are tradeoffs" to achieving lower rates, including the elimination of popular deductions -- including the mortgage interest deduction and the deduction for state taxes. "But, look, 95 percent of individuals under our plan will not be itemizing. So, a lot of these individual measures aren't going to matter. We actually lower their income rates. As I said, the average family is going to see higher income. So, this is really an important thing to do and to address."
House Speaker John Boehner said the way to get the economy growing is the bring down tax rates. "And to bring down rates, you clean out a lot of the garbage that's in there and the special interest issues that are in there. And so I think we ought to have a real conversation about this, and this is the beginning of that conversation."
White House spokesman Josh Earnest said on the plus side, Camp's proposal would close "loopholes" involving corporate jets and carried interest. "So the President believes that we can close those loopholes and make our tax code a little bit more fair. And we're pleased to see that Congressman Camp's proposal includes closing some of those loopholes.
"I'd also note that apparently Congressman Camp has embraced another concept that the President has put forward, which is using some of the revenue from corporate tax reform to invest in infrastructure. Again, this would create jobs in the short term, but also lay a foundation for our long-term economic strength. So there are a couple of reasons to be optimistic about it.
"But, of course, there are some aspects of this proposal that we do not agree with," Earnest continued.
"The first is that there does not appear to be any money or any revenue raised from this corporate tax proposal that would go to reducing the deficit. That is something that is of concern to the administration. That's something the President has long said that we should do; that this would be in line with a balanced-approach deficit reduction. The second thing is that, more troublingly, Congressman Camp's proposal appears to actually add to the long-run deficit.
"The last thing, and in some ways this is the most important, the President believes that our tax code should reward hard work. And one way that we can reward hard work is to extend and expand the earned income tax credit. The earned income tax credit goes to working people, and the President believes that further tax breaks for working people is a good way to strengthen our economy, expand economic opportunity, and make sure that hard work is rewarded in this country.
"But let me end where I began, which is to say that we welcome the constructive, specific proposal that Congressman Camp has laid forward. I understand that he's presented it as a discussion draft. And this administration will certainly take part in discussions with members of Congress in either party who want to put forward constructive proposals to simplify our tax code, to make it more fair, and orient our tax code around policies that will strengthen our economy and create jobs."