House GOP to Unveil Tax Reform Proposal

Plan would institute top tax rate of 25%, but detail still to emerge

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Before House Ways and Means Chairman Dave Camp ends his term in 2015, he will leave behind a years-long effort to reform the nation’s tax code. His proposal, set to be released Wednesday, will call for drastic cuts to the personal and corporate tax rate and the end of some deductions.

Camp laid out the bare bones of his plan Tuesday night in an op-ed in the Wall Street Journal. “Over 99% of tax filers will face a top tax rate of 25%,” he writes, down from a top individual tax bracket of 39.6% and a top corporate tax bracket of 35%. Camp would impose a 10% surtax on certain types of earned income over roughly $450,000 a year, according to an analysis by the Washington Post. The proposal would also tax capital gains and dividends like ordinary wage income, but 40% would be excluded from income for tax purposes, according to the Journal. Camp claims the plan would unleash economic growth.

“After this streamlining of the tax code, the size of the economy will increase by $3.4 trillion over the next decade, or roughly 20% compared with today,” he writes. “This will lead to nearly two million new jobs—and producing up to $700 billion in additional federal revenues that can be used to lower taxes even further or reduce the debt.”

Tax experts are eager to see how exactly Camp supports his claims. “The key is always in the details,” says Roberton Williams, a Senior Fellow at the non-partisan Urban-Brookings Tax Policy Center, who notes that the growth projections in particular are “always uncertain at best.” In the op-ed, Camp notes only a few revenue raisers, including the “clean up” of carried interest, ending the infamous corporate jet tax break, and cutting the so-called “John Edwards” loophole, which allows certain self-employed people to avoid payroll taxes.

Although many details are still to emerge, there are some who are already criticizing the proposal. Steve Wamhoff, the legislative director of advocacy think-tank Citizens for Tax Justice, takes issue with the breaks in capital gains and dividends, which he calls “absolutely the worst possible thing in the tax code.”

“There’s a lot of smoke and mirrors involved, but if you just do the math and look at the bottom line here, basically he’s trying to get us back to the point where people who get their income from investment…to pay maybe the 15 percent rate which is what it was under Bush,” says Wamhoff. “We would say you got a major problem.”

Camp argues that his proposal would make the tax system more simple and fair, but he’ll have an extraordinary time pushing his proposal through Congress. On Tuesday, both Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell said it would be extremely difficult, with the latter arguing that Republicans would have to retake the Senate for there to be serious progress. That, of course, won’t be until after this fall’s elections, when Camp will have handed his gavel on to someone else.

43 comments
steveclark
steveclark

In order to cut the top rate from 39% to 25% someone will need to pay more and it will not be the most wealthy.  Republicans can not be trusted to reform the tax code because they are owned by and only represent the wealthy, Simplify yes but fundamental question for any tax reform should be "does the change reduce the tax burden on the poor and middle class"?e

drudown
drudown

The GOP’s “new Tax Plan” not only DOESN’T PENCIL…it conspicuously eliminates crucial deductions (e.g., home mortgage interest deduction) to PURPOSELY BENEFIT the 1% and the GOP’s FOREIGN DONORS that (drumroll, please) will displace US Citizens that can no longer afford to acquire real property. This is exactly the kind of ABUSE of POWER by the GOP that warrants their collective IMPEACHMENT. Taken to its illogical conclusion, the GOP puppets in office seem to parrot the same unfounded, Tea Party theory that, gee, “maybe not following the law and ‘shutting down’ the government is somehow ‘needed medicine’ for the State as their own GOP Senate leader faces indictment charges for Corruption and Self Dealing (e.g., Sen. McConnell accepting personal gifts and perks from the Foreign money pushing obstructionist tactics that culminate in the present breach of Duty). Of course, no officer of the Court can cite any such legal authority purporting to justify the Congress placing personal interests (or even GOP special interests groups’ agendas) over performing legal functions and honorably discharge agency on behalf of the People, for none exists. See, e.g., Lundy v. Masson (2008) 260 S.W.3d 482 (“A Fiduciary Duty arises out of agency or operating in an official capacity based on a special relationship between the two parties- particularly where one is subject to the control of the other”). As such, it is simply unavailing for the Speaker or GOP Congress to invoke self-made procedural “roadblocks” or even purport to interfere with the necessary and proper functioning of the State via FRIVILOUS law suits against the Commander in Chief or to “raise money” for more corruption. By analogy, the GOP would condition the People to believe a Financial Advisor appointed by the State could, what, refuse to promptly file necessary legal documents pursuant to Court Order because he/she “refused to follow the law” on account of partisan beliefs. That is advocating for no law at all.

“Truth fears no trial.” – Thomas Fuller, M.D.

It is well established that the law of Judicial Estoppel is sometimes referred to as the doctrine of preclusion of inconsistent positions and has historically applied to any official proceedings in order to prevent declarants or parties from ‘playing fast and loose’ with the Duty of Candor, Duty of Loyalty and Duty to Faithfully Uphold the United States Constitution while acting in an official capacity on behalf of the People [see, e.g., Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 181]. The law of Judicial Estoppel is the Founding Fathers’ mechanism to outlaw “flip flopping” on material facts, evidence and positions in order to maintain the integrity of the government, e.g., Judicial Estoppel precludes a party from gaining an advantage by taking one position [see, “strict construction of the Constitution is necessary and proper”- GOP], and then seeking a second advantage by taking an incompatible position in disputes involving the same set of operative facts [see, “the duty to strictly construe the plain meaning of the Equal Protection Clause PRECLUDES the GOP Congress from selective enforcement of Taxation, Immigration and Environmental Laws based on any particular person or voting base’ subjective or partisan will to the contrary’]. [see, Id.; Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 943. Consequently, the GOP members of Congress has no apparent, much less actual, authority or “discretion” to draft “special bills” or “ghost written legislation” that purports to treat similarly situated citizens (i.e., whether U.S. born, Foreign national, U.S. Corporation or Foreign Corporation with “minimum contacts” here in our jurisdiction) DIFFERENTLY under the laws.

True or False?

Accordingly, since the GOP members of Congress have no apparent, much less actual, authority or “discretion” to draft “special bills” or “ghost written legislation” that purports to treat similarly situated citizens (i.e., whether U.S. born, Foreign national, U.S. Corporation or Foreign Corporation with “minimum contacts” here in our jurisdiction) differently under the laws by, inter alia, (1) purporting to “grant amnesty” to millions of Foreign nationals here in violation of U.S. immigration law; (2) “tax exemptions” to the most profitable U.S. Corporations; (3) “blanket immunity” to U.S./Foreign/Multinational Corporations; or (4) otherwise purport to “contract away” the right to access the Courts/”place undue burdens” to the fundamental right to vote/”pass invidious legislation”… WHY is the GOP WASTING TAXPAYER MONEY ON "AGENDAS" or UNLAWFUL "trade agreements" ("XL Pipeline or Trans-Pacific Partnership) or "mass amnesty" when EACH INSTANCE OF PROPOSED STATE ACTION VIOLATES THE EXPRESS REQUIREMENT OF DUE PROCESS OF LAW?How is the KNOWING and DELIBERATE REFUSAL to FOLLOW FEDERAL LAW when making official ADMISSIONS and proposing wholly unauthorized courses of State Action not require a Department of Justice investigation as to (1) WHERE THE MONEY IS COMING FROM IN THESE SUBVERSIVE MOVEMENTS and (2) what is the LEGAL AUTHORITY based on PRIOR SUPREME COURT PRECEDENT that these GOP declarants in PUBLIC OFFICE are RELYING ON when making SUBVERSIVE statements and/or advocating an UNLAWFUL course of action (e.g., “suing the Commander in Chief”)?  

Merely stating the proposition is an ACTIONABLE, TREASONOUS notion that serves no legitimate State Interest at all. As an officer of the Court, I would like the Independent Judiciary to take notice of the GOP ADMISSIONS that are wholly FRIVILOUS and UNCONSTITUTIONAL on their face. These statements are part of a larger CONSPIRACY to OBSTRUCT FEDERAL LAW.

Yes or no?

jw_2013
jw_2013

Sorry! Too many details are missing to have an educated option on this tax change.  For example, what is maximum AGI level to be eligible for the 10% tax ? What deductions will still be allowed; Property Taxes, State Taxes, Mortgage Interest, Charitable Deductions, Medical Expenses, etc. ?  Solid examples are needed; there are too many "spin" statements here to have an informed opinion.

mantisdragon91
mantisdragon91

The GOP plan is to cut taxes for the rich. Cue the shocked face.

wbarstow4
wbarstow4

I have a really easy plan. Everyone is taxed at exactly the same rate, regardless of who many kids or anything else. No deductions are allowed for anything. Safe and fair. Everyone thinks that the rich top 1% are taxed higher when in reality they pay to make sure they don't get taxes. They spend thousands each year to find deductions and loopholes. Look at Buffet he actually said his tax rate ended up being lower than his secratary's because of the deducitons we was allowed to take.

jbordenet
jbordenet

20% growth in ten years is a little less than 2% a year. I think we are doing better without his plan.

oddegg
oddegg

Beware of Republicans bearing gifts. It is usually for their benefit.

CharlesBoyer
CharlesBoyer

Whenever the GOP says it has a new tax plan, I am immediately suspicious.  It will be sold as a tax break for the middle class, but somehow I -- a solid member of the middle class -- am going to end up owing more the government every year.


That in mind, I am have less than zero interest in them meddling with the tax code once again and lying through\ their teeth to me about how it's going "help" me and my family.

AlphaJuliette
AlphaJuliette

 "Camp claims the plan would unleash economic growth."
The old "if we cut taxes the economy will take off!" fairy tale.  Didn't we (re)learn this back when Bush was president?


And how, may I ask, will cutting taxes do anything to pay off the national debt?  It's almost ignored in this article which means it's almost ignored in the tax plan itself.  "—and producing up to $700 billion in additional federal revenues that can be used to lower taxes even further or reduce the debt.”


Or reduce the debt...even!  Nice after thought there since it's the GOP who are hollering the most about raising the debt ceiling.  If they have the opportunity my prediction is that they will opt for cutting taxes again.  The national debt will simply take care of itself, or some such, er, thingy.

Speaking of which, serious cuts in spending will have to be taken into account IF they succeed in reducing taxes overall.  Will need a plan for that as well.  Thus far the crickets are chirping because, as you know, "we don't want to do anything that will cost us votes in November" as any cuts they have talked about thus far involve defunding Obamacare, cuts to Social Security and Medicare, cuts to food stamps, and ending any unemployment benefits for the long term unemployed.  Don't see any other areas they talk about.


Sorry to be the dour skeptic here but we saw this (wonderful) tax reduction plan in action back in 2001 and again in 2005 after the Presidential elections where Bush used the tax cuts buy votes.  Look how well that turned out.  5 years after the Great Recession and We the People (not corporate American, investment firms or Wall St.) are still trying to recover.  Guess who's going to benefit from the tax cuts?


The GOP has no reasonable fiscal plan.  All they say is cut taxes and cut spending.  But where is the actual plan?  It's in a fairy tale book called "Cut taxes and let the economy grow."

tkulaga
tkulaga

Buying and selling of stocks does not give any money to the businesses to which the stocks apply unless it is the buying of an initial offering (ie opening day first few hours of FACEBOOK). Buying and selling of Ford, Apple, etc. is simply the exchange of money between individuals with a percentage going to two brokers as commissions. My point is, for the most part, so-called investing in stocks does nothing to grow business.  It is similar to anyone betting on horses.

BobJan
BobJan

@drudownI sort of disagree with you on the home interest deduction. I think (?) that most people don't have enough interest to go over the total exemption automatically given to them and so it is of no benefit whatsoever. I remember when I had some mortgage interest and it was less than the auto deduction given in the IRS form so it really was a washout. I've attached an article for you to look at and a site for more information.

The mortgage interest deduction on your federal tax return is intended to encourage homeownership by giving you a tax break on the interest you pay on your house note.

There is little question it benefits millions of middle-class homeowners as well as the wealthy. But does it provide a compelling financial incentive to own rather than rent? Not so much.

According to a study by The Wharton School at the University of Pennsylvania, mortgage interest deductions for households with incomes between $40,000 and $75,000 average just $523, while households with incomes above $250,000 enjoy an average write-off of $5,459, or more than 10 times as much.

You must itemize on IRS Form 1040 Schedule A to claim the deduction. If you do, you can also deduct the interest paid on a second home. The rich do both, but most of the middle class does neither.

"For millions of taxpayers, therefore, the mortgage interest deduction provides no added incentive to buy a home," says Hanlon. "It makes no sense in terms of targeting the incentive at the people who need or could use it."


http://www.bankrate.com/finance/taxes/tax-deductions-favor-rich-2.aspx


happy reading

ARTRaveler
ARTRaveler

@SpikeLee  We have part of the GOTP demanding further tax cuts to wipe out departments they don't like while others are demanding that Hegel not bring the Pentagon manpower down to the sequestration level they have already approved.  Hegel, in fact, asked for 420,000, a 20,000 INCREASE over what the GOTP signed off in the sequestration documents but still is catching hell from the groups that want all war all the time BUT NO INCREASE IN TAXES, Bush 2's voodoo economics.

ARTRaveler
ARTRaveler

@wbarstow4  The calculation was done when Huckabuck was running on his "flat tax" proposal and his 14% , to give the same amount that was currently being collected was off by 12%.  It would take a flat 26% rate which is a heck of a hit on the poor but a boon to the rich.  And, of course, corporation slip by free while using all of out socialized roads, ports, etc.

tommyudo
tommyudo

@wbarstow4  


Please tell us how this is to be done, without resorting to dictatorial powers?  Do you want to put CPAs and attorneys out of work? The Pols aren't going to hurt those that bankroll their campaigns and who they grovel to. Ain't gonna happen, at least not in our lifetime.

manlyman
manlyman

@wbarstow4 Let's not discuss the rate, let's discuss the actual dollar amount that came out of his pocket, and the amount that came out of hers. And of course there still is no law saying he can't write an extra check to the gov out of the goodness of his heart.

ARTRaveler
ARTRaveler

@ViableOp  Start with the F-35 strike fighter.  It was way over budget and will be for every production copy, it was 7 years late, and it can't fly in stealth mode in the rain.  There is also an issue with pilots blacking out because they came up with a new heads-up display too close to the pilot's eye.  In a "real" business, the company sourcing it would have been fired, the cost would not have been allowed to go up, and both the Pentagon and the Lockheed managers would have been fired.

wbarstow4
wbarstow4

@oddegg Beware of any gift by ANY politician. It has nothing to do with Republican or Democrat. That is just ignorance talking.

wenchypoo
wenchypoo

@oddegg  "The proposal would also tax capital gains and dividends like ordinary wage income, but 40% would be excluded from income for tax purposes"


There goes the 401k and IRA income in retirement!

wenchypoo
wenchypoo

@CharlesBoyer  Remember Clinton's two-level tax plan?  It was a giant tax raise for the lower and middle classes.  Anything to not legalize marijuana, I suppose.  Colorado made $1M in taxes from it last month alone.  Imagine what the feds could do if only...

tom.litton
tom.litton

@AlphaJuliette They say it is revenue neutral change.  You shouldn't believe that until the CBO releases it's report, but if it is, then i don't mind the tax rate coming down (especially for corporations).  I would prefer revenue be increased a bit (~$100B), but I think a simplified tax code with loop holes closed is a step in the right direction.  


I would like to see an automatic trigger if the deficit exceeds say $500B, so that the $450K+ crowd gets the old tax rate while the deficit is above that amount.

wenchypoo
wenchypoo

@AlphaJuliette  You're forgetting the Clinton years, where the brackets were 15% and 28%, with the true top tier at 33%.

ARTRaveler
ARTRaveler

@tkulaga  A lot of companies are buying back a lot of their stock and also use their stock for their 401-K plans matches.

wbarstow4
wbarstow4

@tkulaga I think you may want to actually do a little homework on that before posting such a clearly incorrect post. Even when stocks are trading on a secondary market, the theory is that the more widely held, actively traded a stock is, the lower the company's cost of equity capital is. Liquidity is a good thing, and that will be inputed into the company's stock price the next time it offers shares to investors.

drudown
drudown

@BobJan @drudown  


Huh? 


Why are you "directing me to reading" when you cannot even formulate a cogent argument yourself. Your asinine assertion that "I think that most people don't have enough interest to over the total [home mortgage interest] exemption automatically given to them and so it is of no benefit whatsoever" is not only illogical, it is flat out FALSE.


ALL HOME MORTGAGES are FRONT LOADED with interest. The primary "benefit" of owning a home residence (i.e., other than investment) is that one can DEDUCT the monthly payment of interest against one's taxable income. So if this BENEFIT was eliminated per the GOP's nefarious "tax reform" (lo and behold!) now the only members of society that can purchase real estate must do so ALL CASH, i.e., it would not only WRECK the Mortgage industry as we know it, but it would WRECK the Real Estate market as we know it. 


All to simply REDISTRIBUTE WEALTH and POWER per the GOP's FOREIGN MONEY PUPPETEER's strategic objectives. If you are going to "disagree"…try to be serious and flesh out WHY any reader should agree when the TRUTH speaks for itself. 


Namely, this "tax reform" hurts the UPPER-MIDDLE CLASS and KILLS any chance of social mobility via residential real estate.


What "leaders" the GOP Congress have proved to be!


"Thy love afar is spite at home." - Emerson

AlphaJuliette
AlphaJuliette

@wenchypoo

My point is that the Republicans have only two ideas when it comes to finances.  Spend less and tax less.  Of course they probably mean immediately which has done more harm than good in the past.  Sequestration was one such example.  So where the Bush tax cuts.  With so many established obligations we need a timetable and a scaled plan going forward.

By the way, I'm all for spending less, much less.  But as taxes go I prefer to see a more even distribution of the tax burden, a closing of loopholes, less subsidies for those who really don't need them and a plan with a timetable included. 

tkulaga
tkulaga

@ARTRaveler @tkulagaI admit I am out of my league here. I Googled to find out how many companies are buying back their shares and found there are ten companies (Apple, Walmart, Merck, Time Warner etc.) doing so as of late 2013 for various reasons. These entities have too much cash on hand and nothing to do with it so they buy their stocks to please powerful shareholders and shore up their 401 K plans. I highly doubt it had anything to do with them worrying about their future cost of capital as has been suggested.

tkulaga
tkulaga

@wbarstow4 @tkulagaYour answer sounds great for the academia or when applying for a job, but little to do with investors on a day to day basis..

drudown
drudown

@BobJan @drudown  


Given current home prices… WHO DOESN'T MEET THAT requirement?


(cricket, cricket)


Sorry, you are flat out, 110% talking nonsense. You refuse to challenge a SINGLE point with EVIDENCE.

drudown
drudown

@BobJan @drudown  


"So hot? my poor little sir." - Emerson


Your "point" that "most people don't use the home interest deduction" is a LIE and UNFOUNDED. Should I sugarcoat it more?

BobJan
BobJan

@drudown asinine assertion? who are you? the ultimate authority on asinine? Guess it take's one to know one if you say so.

BobJan
BobJan

@drudown Huh! well I guess I'm on a different page than you are. 

Standard Deduction Rates. The applicable standard deduction rates for 2013 are $12,200 for married taxpayers filing jointly; $8,950 for head of household; $6,100 for individual taxpayers and $6,100 for married taxpayers filing separate.

If a taxpayer doesn't meet the threshold of $12,200 their Mortgage Interest has no absolute meaning in the application of the form itself. Take away the Mortgage Interest Deduction completely and leave the $12,200 deduction would probably be good for 85%+ of American middle class leaving the other 15% out in the cold of whom are above the middle class.

reallife
reallife

@ARTRaveler @reallife @AlphaJuliette @wenchypoo  "Greed is not good and things like this will kill capitalism." 

soooo what's the problem? isnt that what you and your libtard brethren want? then at last you will be living in the socialist paradise that you all desire... good luck



ARTRaveler
ARTRaveler

@reallife @AlphaJuliette @wenchypoo  Most of the 47% that pay no FEDERAL income tax still pay out over 20% of their small income in state income taxes, sales taxes, etc.  Maybe if we could get the good people who bitch about the 47% to actually pay a living wage, the 47% would make enough to pay some taxes but as long as Corporate America is good with people trying to live on $15K a year or less while the president of a local bank here in Arkansas got pay of $8.4 million last year.  He can't spend it fast enough to use up $8.4 million in one year.  The same with $20 million bonuses.  No one is worth a bonus that big.  If the companies are making that much money, send it back to your share holders or cut your costs.  Greed is not good and things like this will kill capitalism.

AlphaJuliette
AlphaJuliette

@reallife

Sure,  just as soon as the job creators get around to creating the jobs the 47% need.

reallife
reallife

@AlphaJuliette @wenchypoo  "But as taxes go I prefer to see a more even distribution of the tax burden..."


sooo, you want the 47% that pays NO income taxes to pay their fair share...