DAVE CAMP’S (R-Mich.) raison d’etre is to change the way Washington does taxes. Washington’s is not to change at all.
Last week, Camp revealed plans for the Tax Reform Act of 2014, which aims to simplify the current tax code by reducing the number of tax brackets and significantly scaling back deductions and exemptions that The Economist claims “leak $1 trillion in revenue a year and make compliance a nightmare.”
As good as these proposals sound (despite many kinks), essential to the political terrain of Washington are two insurmountable obstacles that will keep them from becoming law. The first is partisanship. Neither party is in the habit of giving a passing thought to tax reform without strings attached. The Democrats want to see their projects funded and the Republicans won’t consider higher revenue.
The second obstacle is what this blogger is for the first time calling “special interests.” The term is misused, abused, and overworked for a variety of reasons, but applies quite nicely to the special treatment afforded to certain groups and industries through tax preferences. Anyone who currently enjoys such treatment is vehemently against the bill. The National Association of Realtors, a lobbying powerhouse, is “extremely disappointed.” The Private Equity Growth Capital Council also finds it all “so disappointing.” These groups enjoy the mortgage interest and carried interest deductions respectively, two features of the status quo that Camp would like to see vanish.
Since Camp’s logic is to simplify brackets, widen the base, and patch the leaks caused by preferences, the bill is expected to generate revenue. The House Joint Committee on Taxation predicts that, were the bill to pass, it would generate an extra $3 billion in the next decade. Sadly, however, Camp’s most vocal opponents don’t care much for its overall impact. They care about their industry, and that’s enough to keep them going. As one reads this, “a tribe of lobbyists is pressing conservatives to snuff Camp’s proposal, threatening to withhold precious campaign dollars.” Such is the fate of someone who dares challenge Washington.
Tags: David Camp, Joint Committee on Taxation, National Association of Realtors, Private Equity Growth Capital Council, Tax Reform Act of 2014, the economist