Skip to Content

Support MinnPost

MinnPost logo 2014 Summer Member Drive

Support the journalism that matters to you
Become a sustaining member today

Hats off to GOP Rep. Dave Camp for putting out a tax plan

REUTERS/Shannon Stapleton
Camp's revenue-neutral plan will knock the top marginal rate down from 39.6 to 25 percent, although a "10 percent surtax on certain types of earned income" would make the true effective tax rate higher on those with incomes over $450,000.

Hats off to U.S. Rep. Dave Camp, R-Mich. and chair of the House Ways and Means Committee, who on Wednesday will put out a proposal for a comprehensive overhaul of the federal tax system.

Rep. Dave Camp

Republicans often wale on the U.S. tax system — rates too high, too complicated, bad for the economy — which is much easier to do than to actually specify how you would change it. A litany of vague complaints about the code would be easy to compile, as would a litany of complaints about specific tax provisions, which usually come down to: The people that have to pay this tax don't like it. But that is cheap political theater.

Camp's term as chair of the storied House committee that oversees the tax code is up at the end of this session. And he has apparently spent his tenure devising an actual overhaul. The goal is to eliminate so many special tax breaks that rates can be lowered dramatically and still raise basically the same amount of money as the present system.

We still don't know many details. But Lori Montgomery of the Washington Post got a look at an overview/analysis of the plan by the staff of the bi-partisan Joint Committee on Taxation. She reports that the revenue-neutral plan will knock the top marginal rate down from 39.6 to 25 percent, although a "10 percent surtax on certain types of earned income" would make the true effective tax rate higher on those with incomes over $450,000.

In order to achieve that kind of rate cut, a great many existing tax breaks will have to be eliminated. Those are in the plan, but haven't leaked to the public yet.

My main point at the moment is just to applaud Camp for putting out a plan. Politics should be, but seldom is, about things like this.

Unfortunately, more and more, politics for the professionals is about nothing except seeking short-term advantage over the other party, even if it means your own party stands for nothing but good vibrations that stimulate the base and pacify swing voters.

Politico, which announces by its very name that it is obsessed with politics, has a piece allowing various unnamed Republican politicos to express their concern that putting out a tax plan with specifics in it is risky, stupid and crazy.

"Many senior [Republican] figures see no need to open up a new policy discussion in February of an election year without a partner in the Senate and White House," Politico says, adding:

More than a dozen skeptical lawmakers and senior aides told POLITICO they thought it was a strategic blunder to unveil a plan outlining which loopholes to cut, whose rates will be slashed and which sector of the economy will see higher taxes when there’s little expectation the code will be reformed in 2014.

Get MinnPost's top stories in your inbox

Related Tags:

About the Author:

Comments (27)

Let's hear it for the Representative from Michigan

While I may or may not like the specifics at least it is a stab at doing the right thing.

Tax reform has been long needed and all anyone ever talks about is the rate not the loopholes and deductions which usually benefit the upper income brackets.

Give him a cookie

Putting forth a plan is something responsible legislators would have done a long time ago. Instead, there were endless complaints, investigations that went nowhere, and pointless votes to repeal the Affordable Care Act. Why could he have not taken his stab at the right thing when all that was going on?

My guess it will be the usual Republican plan

Raise the taxable income of the middle class, so their taxes will go up (but not their rates).

In the Washington Post

In the Washington Post story

(quote)

.....the plan would impose a 10 percent surtax on certain types of earned income over roughly $450,000 [to $1,000,000] a year. The surtax would hit many salaried professionals, such as attorneys and accountants, while dodging farmers and manufacturers — as well as the super-rich, whose income often is derived primarily from interest and investments....

(end quote)

In the AP story:

(quote)

...It is an important political point for Republicans that the plan is not seen as a big giveaway to the rich. The new surtax on high-paid workers would help ensure that wealthy taxpayers as a group continue to pay about the same amount as they pay today, said the GOP aide...

(end quote).

So, toss the higher paid professional workers under the bus to provide the truly wealthy a fig-leaf that upper decile income class, as a whole, are paying the same total taxes.

And you thought the truly wealthy would have class solidarity--the doctor the friend of the tycoon!?!

Nope!

Under the bus, let them eat previously frozen lobster!!

"10 percent surtax on certain types of earned income"

Would this include bonuses to hedge fund managers?
Does it do anything about corporations which pay little or no income tax?

Most democrats will oppose this

Even though it's revenue neutral and working people will not pay any more than they do now, democrat ideologues will oppose it because to them, tax collection isn't about funding the government, it's about extracting revenge from people who have made a good living.

The purpose of taxation is to pay for the costs associated with the constitutional roles of government. It is not supposed to be used for social engineering, rewarding your friends or punishing your enemies.

Conservatives would most support a tax system overhaul that was based on consumption (national sales tax) or a flat rate income tax. Anything else is simply enabling politicians to use the tax code for reasons other than to collect revenue to pay for government.

My guess is that most republicans in congress will support this plan if this is the best they can do with a democrat in the white house.

Revenue Neutral

Revenue neutral means the total is the same. Usually if a revenue neutral plan comes from a Republican, the middle class should watch their wallets.

The rich will pay less, the poor can't pay more, that leaves the middle class to pick up the slack.

The "poor" can't pay more?

The "poor" do not pay income taxes.

The poor pay

other taxes such as payroll taxes, sales taxes, property taxes.....

State vs Federal

They do pay state income taxes, just not federal income taxes.

"Most Republicans in Congress will Support this Plan"

Is that why the Republican leadership has said the bill will not be brought up for a vote?

Plan?

It seems pretty optimistic to call this a plan.

This is the same mystery "plan" that was reported last June:

http://talkingpointsmemo.com/dc/baucus-camp-won-t-answer-basic-tax-refor...

As in the link name, there were no specifics discussed then.

Basic questions--where does the split from 10 to 25% occur? A lot of randomly chosen percentages would work mathematically--it all depends on how many are in each rate and what deductions are eliminated.

If someone makes one dollar more than the 10% tax rate limit, what happens then? Gosh, it might be a very
big disincentive to work! Or there might need to be graduated rates--not so flat any more.

If this is commendable leadership, it is really sad.

There is no plan there, it's only two tax rates with no specifics. I could have easily said 9% and 22%--those rates mean nothing by themselves.

Special Interests will gut any plan Democrat or Republican

The specifics of a tax reform plan hardly seem to matter since it will be gutted by special interests groups and legislators that lack the courage to just say "no." Phase out the deduction for mortgage interest? Not a chance. Close a corporate tax loophole? Not going to happen. Even if overall, people pay about the same amount in taxes, nobody is going to give up a tax break that favors them.

I want to see the specifics

The anonymously-quoted Republican sages may well be correct – this looks like a strategic error in an election year. That said, I’d sure like to see the specifics.

I’m inclined to agree with Jody Rooney – any attempt at all, even a fatally-flawed one, seems better to me than the current “drift with the tides” hodgepodge that is a “system” in name only. Neal Rovick also makes a good point – many a professional is not going to be happy to find that her/his half-million-dollar income is taking a hit while the Goldman Sachs CEO gets to keep his billions essentially unchanged. Paul Brandon also asks a useful question, but I guess that would be answered by the release of specifics for Representative Camp’s plan.

Mr. Tester, of course, fails to understand that tax policy is almost always used for social engineering (mortgage exemption, anyone?), rewarding your friends (capital gains at a lower rate), and punishing your enemies (ending tax breaks for renewable energy and/or energy efficiency). The policies he suggests as alternatives will fall most heavily on those whose incomes are primarily spent on providing the basics for their families (food, clothing, shelter, transportation). A far greater percentage of a median-income family’s income will go toward those four items than is the case for Lloyd Blankfein (Goldman Sachs), and a flat tax, unless it’s modified to be more a curve than flat, will have the same effect. Ten percent of $40,000 hurts that family more than 10% of $40,000,000 will hurt the 1% family – and I’m not even sure $40,000,000 will get that family into the 1%. A flat tax is all of Mr. Tester's objections to the current awful system rolled into one: it's blatant social engineering, it rewards political friends, and it punishes those without the wherewithal to become friends.

I’d personally welcome a simplification of the tax code, and I’m fine with “revenue neutral.” As in everything else, it’s the tradeoffs that make simplification and revenue neutrality possible that are “…the devil in the details.” But we’re all in this together, and I’m a believer in shared sacrifice. If, for example, Representative Camp wants to eliminate my mortgage deduction, well, OK, as long as something equally painful and costly is removed from the list of deductions for those whose incomes make mine look like the pocket change it is. In that context, I think Cameron Parkhurst is pretty close to the truth. Eliminating the mortgage interest is not going to fly with huge segments of the population, and corporations like Boeing, which paid no federal income taxes last year, are not suddenly going to step forward and say “We’d like more taxes, please, so we can lower shareholder dividends and profit margins.”

We’re all special interest groups of one, and while I’m not going foment revolution if I don’t like tax policy, I’m also not going to delude myself into thinking the policy is fair if the yawning chasm between the haves and have-nots in the country continues to grow as it has over the past 10 to 15 years. I look forward to seeing the details of what Representative Camp proposes.

Applaud a plan?

The guy does his job for the first time in his career and we're supposed to applaud? Talk about celebrating minimum requirements. By the way, we don't need revenue neutral tax plans, we need to increase government revenue. We have trillions of dollars worth of problems ranging from infra-structure to Social Security spending that require additional spending. At current spending levels these problems will crush our economy.

Mitt Romney

The problem is that Mr. Camp would raise Mitt Romney's tax rate, just to pick one example from 13 percent to 25 percent, nearly doubling the amount in taxes the former presidential candidate would have to pay. What do think the likelihood of that getting through Congress is? The lack of bipartisanship we see in our politics today isn't because Democrats don't agree with Republican positions, it's the result of Republicans not agreeing with Republican positions.

Only if

it taxed all income earned in the United States by 'foreign' companies (off shore subsidiaries of American or multinational corporations). It would require very basic changes in the tax laws, not just adjusting the tax rate structure and cleaning up exemptions.

Off shore income

Mitt always claimed he didn't shelter his income offshore.

What about the income from family trusts?

I seem to recall that on the tax forms he revealed he paid something like 13%, with speculation that the rate on earlier forms was even lower. He's clearly using some form of avoidance scheme.

Family trusts

It's very easy for an extremely wealth person to lower their income tax rate doing things that are perfectly legal and, I would add, not at all immoral. Wealthy people have the flexibility to order their affairs in ways that reduce tax liability. Most of the rest of us, who make our money in the form of wages, have very little flexibility at all in how those wages are treated for tax purposes. This has always been one of the problems with a flat tax, that it treats all income equally, but ignores the fact that the role income plays in the lives of people is very unequal.

The Post

I see there is a laudatory opinion piece in the Post today about Mr. Camp's proposal. This goes to an issue I often have with Republicans. Whenever I hear a Republican talk about issues like tax reform, and health care, I say to myself, I am in favor of that stuff too. The problem is that Republicans aren't in favor of the positions they publicly support. Mr. Camp wants a 25% tax bracket. But I guarantee you neither Mr. Camp, nor the Republicans in Congress want to raise Mitt Romney's tax rate from 13 to 25 percent, which is a big reason why Senator McConnell declared the Camp tax plan dead prior to arrival. So why should Mr. Camp get credit anywhere for making a proposal which his party doesn't support, and which he and everyone else has no chance of passage?

Having it both ways

He makes a proposal to pick up swing votes, but he'd vote against it if it actually made it to the floor in its present form.

Mr. Camp

I think Mr. Camp is incredibly naive. Like a lot of inside the beltway types, he just doesn't understand how taxes work.

Mitt Romney's taxes

Most of Romney's income is in the form of capital gains, which was taxed at 15% for the past few years. It's the same rate and the reason why the disingenuous Warren Buffet could say he paid a lower rate than his secretary, who paid a regular income tax on her wages. (Buffet was probably wrong about that comment anyway since the average effective tax rate of an American wage earning is less than 14%.)

But the capital gains tax rate was raised to 23.8% this year.

The reason the capital gains tax rate was 15% and not 30% like most democrats would like, is so this nation's businesses can attract investors so they can expand, create jobs, etc., things democrats seemingly know nothing about.

Even so, the U.S. capital gains tax rate is greater than China's (10%) If it was up me it would be zero to boost capital investment. But that's just me. I don't suffer from wallet envy.

Political courage

I am no great believer in courage as something that exists in American politics. This isn't Russia where losers in political disputes get shot. The worse thing that can happen to a congressman is that he loses an election and the upside of that is that he or she doesn't have to live in DC anymore. But I think if you look at Rep. Camp's proposal, there is nothing there that would trouble any voters he needs for reelection. The reduction of top interest rates would be quite popular, and the flat tax has a near cultish following among conservative voters who provide Mr. Camp with sufficient votes he needs to get reelected. As Politico points out, putting out a tax plan can be quite risky for Republicans but the risk is on the national, not the local level. The problems in Mr. Camp's plan that folks like me would zero in on, just don't matter in his district, and no national campaign is bound by them.

There's no risk for republicans

other than giving the democrats an opportunity to change the subject from Obamacare. That's why republicans don't want to talk about it. It muddies the waters in an election year for very little gain. They want to focus on Obamacare to the exclusion of almost everything else and this doesn't help that strategy.

For Democrats

If Democrats proposed this, we would be attacked for advocating mass wealth redistribution from the wealthy, the Mitt Romneys of the world who would see their tax rates of the world, to whomever those increased taxes will go to. In our modern discourse, "reform" and that includes tax reform just about always means shifting a burden from the person using it to a person it isn't. It's a focus group tested word and the point of all focus group tested word is to say something it does not mean.

Republicans love to talk about lowering taxes, and I think that may be while they tend to pay lip service to flat tax ideas, they are never serious about implementing them because even under revenue neutral proposals, there will always be winners and losers, and with respect to a flat tax in theory at least, the losers will be wealthy and politically influential Republicans.