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For Camp’s Tax Overhaul Plan, ‘Dead on Arrival’ May Be Beside the Point
Posted at 5:58 p.m. on Feb. 26
What is the point of launching a trial balloon that has already been fatally shot full of holes?
That was the rhetorical question of the day Wednesday, when House Ways and Means Chairman Dave Camp ceremonially unveiled his plan for the biggest tax overhaul in three decades. The Michigan Republican did so hours after his extensively leaked idea — and the entire topic of an IRS rulebook rewrite — had been marked as a 2014 legislative dead letter by both of his party’s top congressional leaders.
There actually were strategic, selfish and political rationales for Camp to go ahead with his lonely news conference.
Bipartisan support for the concept of a top-to-bottom tax code revamp has been building steadily for more than a decade, but until now no one with the power to get the process started has even attempted a comprehensive stab at the problem. So Camp will get some unavoidable credit, and some tactical advantage, by being the credible lawmaker willing to make the first move.
The debate is probably going to take years to finish, but someone had to start it. And by volunteering to be that guy, his “chairman’s mark” will be the paper against which all future opening bids are going to get compared. As a result, the Michigan Republican’s concepts for simplifying the rate structure and curbing the clutter of tax breaks have a relatively decent chance of making it into whatever bill inevitably moves later in the decade.
If reconfiguring the 7,000 pages of filing instructions has to begin as something of a game of 52-card pickup, then the person who first scatters the deck across the room starts with some advantage.
As a personal matter, he really has nothing to lose. Because of House GOP term limits, from which he’s not going to be given an exemption, Camp has to turn in his gavel at the end of the year. That means he is nearly out of time for wrapping up the project on which he’s been laboring for three years. And once his partner in the effort, Max Baucus, relinquished the Senate Finance chairmanship to become ambassador to China, there was no reason to delay any longer. Camp wasn’t going to find a new Democratic partner in time to unveil a bipartisan starting point.
As a matter of campaign-season positioning, Camp may have also done many of his fellow Republicans something of a favor.
To be sure, there is some needless danger in getting all specific about such a hot-button topic as taxes in an election year when there’s no realistic hope of a resolution.
But there are several political upsides to Camp’s big (and extraordinarily detailed) reveal. The Joint Committee on Taxation summary and “scoring” runs to more than 18 pages of footnotes and tables in tiny type. (Despite hundreds of changes shifting trillions of dollars, the bottom line is that the bill would generate only $3 billion more in revenue during the next decade than the status quo.)
The GOP leadership’s decision to sidecar the tax debate aligns with its strategy for the midterms, which is to do little more than badmouth the president and especially his health care law. But some candidates will conclude they need to be in favor of bold new ideas, not just against Obama, and for them the Camp plan could be just the ticket.
They can point to a JCT estimate that its reforms would add at least 1 point to the rate of annual economic growth for the next decade — while at the same time reducing taxes and simplifying accounting life for the vast majority of Americans. (The top individual rate would drop to 25 percent from 39.6 percent, the standard deduction and the child tax credit would go up and plenty of other loopholes would be tightened or closed. The end result, the JCT estimates, is that the number of filers who itemize would drop to 5 percent from about 35 percent.)
Beyond that, the chairman’s plan includes just enough of the proposals President Barack Obama has been pushing to neutralize a good bit of the Democratic campaign rhetoric about the GOP being the party of the rich. That leaves the Republicans to ponder whether they really want to campaign on the notion that a tax rewrite should raise hundreds of billions in new revenue to meet long-term budget goals. (The richest 1 percent of workers would face a 10 percent surtax on their salaries. Another surtax would be levied on the nation’s six biggest banks. A wrinkle that permits investment managers to avoid most income taxes would be scrapped. Tax breaks for company jets would be curbed. More than $100 billion in corporate taxes would be dedicated to overdue public works projects.)
And if all of that proves unpersuasive, there’s this somewhat-cynical-sounding but entirely true benefit for the capital’s economy: The Camp bill may be properly cited as The Tax Lobbyists’ Full Employment and Economic Stimulus Act of 2014.
Even though the measure is highly unlikely to make it onto the House floor — and will struggle to get a majority from the roster of 23 Republicans and 16 Democrats during its not-going-to-be-scheduled-anytime-soon markup at Ways and Means — law firms and K Street shops will generate countless billable hours just by parsing the bill’s language and coming up with strategies for preserving all the niche deductions, exclusions and exemptions that have only theoretically been placed in jeopardy.
Working indefinitely to prevent something bad from happening to a client is the lifeblood of the advocacy industry, and Camp’s official opening of this tax debate has made sure that dozens of those costly crusades will last for years.