A stark reminder of the dysfunction in Washington, D.C., was delivered last week in the form of a tax reform proposal from Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee. It’s not that Camp’s proposal is dysfunctional — it’s just that there is plenty for both parties to like, and yet the plan has no chance of passage.
Why, even before Camp released his proposal, Senate Minority Leader Mitch McConnell, R-Ky., said of tax reform: “I think we will not be able to finish the job, regretfully. I don’t see how we can.” Simple: Consider it, discuss it, debate it, tweak it and pass it. It called legislating, which seems to be a long-lost skill in the nation’s capital. Camp’s plan should kick off a much-needed debate about tax reform; instead, it has opened an overly rehashed opportunity for criticism and shopworn rhetoric.
“House Republicans refuse to ask the wealthiest Americans and biggest corporations to contribute to reducing the deficit or investing in jobs and economic growth,” said Sen. Patty Murray, D-Wash., and chairwoman of the Senate Budget Committee. “I also am very concerned that this proposal would actually increase deficits beyond the 10-year budget window — an outcome we simply cannot afford given our long-term fiscal challenges.”
Ah, the old “long-term consequences” mantra. As if Congress has the ability to foresee wars in the Middle East and collapses in the housing market and booms in dot-com commerce — the things that tend to drive the economy one way or another. As Zachary Goldfarb of The Washington Post’s Wonkblog.com wrote: “We’re at the point in politics where both parties’ justification for not taking action in the present is because it would do the same harm well in the future.”
Camp’s proposal, in reality, is worth serious consideration, the kind that it might receive if this were not a midterm election year. With all members of the House and roughly one-third of the Senate up for election in November, expecting lawmakers to actually make laws between now and then is a bit of a pipe dream. At least when it comes to the big issues.
Camp’s proposal would overhaul both the corporate and individual tax codes, lowering the basic tax rate while purging loopholes. In other words, the tax rate would be lower, but it would be applied to a broader base of income. The corporate rate would go to 25 percent from a current maximum of 35 percent. The seven marginal rates for individuals would be reduced to three: 10 percent, 25 percent and 35 percent. Specific changes would include taxing investment gains as regular income and eliminating mortgage-interest deductions on home loans above $500,000 — both of which would hit high-earners.
The result? The Joint Committee on Taxation assesses the plan as essentially revenue neutral; it would bring about the same amount of revenue as the current tax system. Bloomberg News wrote editorially: “It would tax the rich more and close many special-interest loopholes. It would create jobs and spur economic growth.” And columnist Jonathan Chait wrote: “It doesn’t use the pretense of reform to shift the tax burden off the rich, as Republican ‘tax reform’ plans usually do.”
So, what’s not to like? The problem isn’t with reformation of the tax code; it’s with congressional members more concerned about positioning themselves for November than they are with leading the country. Camp’s plan loudly addresses the federal government’s inefficient and inequitable system for collecting taxes. If only anybody in Washington, D.C., were willing to listen.