Representative Camp Releases Tax Reform Proposal
Representative David Camp (R-MI), chairman of the House Ways and Means Committee, has released the draft of legislation for tax reform. The draft, which reflects non-partisan political and industry input, was widely praised but will face opposition in attempts at passage this year.
“This legislation does not reflect ideas solely advanced by Democrats or ideas solely advanced by Republicans, nor is it limited to the halls of Congress,” said Camp. “Instead, this is a comprehensive plan that reflects input and ideas championed by Congress, the Administration and, most importantly, the American people.”
Titled “The Tax Reform Act of 2014,” the legislation would amend the Internal Revenue Code of 1986 to:
- Provides an inflation-adjusted standard deduction of $11,000 for individuals and $22,000 for married couples.
- Reduce the current seven tax brackets for individuals into two – 10 percent and 25 percent.
- Reduce the current top corporate rate of 35 percent to 25 percent.
- Continues some taxation of corporate income from overseas, but would bring US tax policy into closer alignment with those of other nations with respect to global income.
- Eliminates a number of tax breaks, and creates a new 10 percent surtax for couples making more than $450,000 per year.
- Repeals dozens of existing tax provisions such as the medical devices tax so that around 95% of households could file a simple 1040A tax return.
- Encourages investment by overhauling investment taxes, exempting 40% of capital gains and dividend income while applying standard income-tax rates to the remainder.
Many of the proposals reflect tax reform ideas put forth by Senator Ron Wyden (D-OR), newly named chairman of the Senate Finance Committee. However, Wyden has already indicated that he will pursue an incremental approach to updating the tax code, rather than any kind of sweeping reform bill for 2014.
Ways and Means Committee ranking member Representative Sander Levin D-Mich., stated, “Chairman Camp’s tax reform proposal opens up a discussion that Democrats have wanted to engage in on a bipartisan basis. As Democrats, we believe it is vital that tax reform encourage economic growth, support working families, broaden the middle class, and address income inequality. It must produce a fairer and more adequate tax code for all Americans, ensuring that wealthy individuals and corporations pay their fair share while preserving our long-term economic security in a fiscally responsible way that promotes jobs in the United States. It is through the lens of those priorities that we will review Chairman Camp’s proposal in detail as the Committee undertakes a thorough examination of his proposal.”
But other reactions have been mixed. The Republican leadership in the House has expressed doubts that such a massive reform bill could see action in an election year, particularly given the complexity of the current tax code. The reform draft is further hampered by the fact that Camp is a lame-duck chairman, limited by protocol to end his tenure as chairman of the committee this year.
Sources: House Ways and Means Committee at http://waysandmeans.house.gov/news/documentsingle.aspx?DocumentID=371169; Accounting Today at http://www.accountingtoday.com/news/House-Ways-Means-Chairman-Camp-Releases-Tax-Reform-Proposal-69802-1.html?utm_campaign=daily-feb%2027%202014&utm_medium=email&utm_source=newsletter; Wall Street Journal at http://online.wsj.com/news/articles/SB10001424052702303801304579407063279404926?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303801304579407063279404926.html