Like many progressives, I’ve been very frustrated by both the gridlock that Republicans have been causing in Congress and the ongoing mischaracterization of it by much of the mainstream press. No sooner had President Obama been sworn into office than Senate Minority Leader Mitch McConnell of Kentucky said that his main goal the upcoming Congressional session was to keep President Obama from being reelected. Fortunately he failed at that, but he and soon-to-be House Speaker John Boehner have successfully kept Congress from doing much of anything. If you’re a progressive, that’s not the direction (or non-direction) in which you’d like to go.
Now it seems that at least some Republicans do want to see movement. They call it going forward; others may see it more as going in reverse. According to the New York Times, Representative Dave Camp of Michigan, the chairman of the Ways and Means Committee, is proposing major changes in the federal tax code. His plan calls for “a cut in the top corporate income rate to 25 percent from 35 percent, and a reduction of the seven individual tax brackets to two — at 10 percent and 25 percent — according to aides familiar with the proposal.”
Why should we worry about something that sounds like needed breaks for the American people? First, taxes may actually go up when deductions such as home mortgage interest payments end. Second, rates this low may only be capable of funding the federal government if there are major cuts in both entitlement programs and other important discretionary spending. Years ago, a major reform bill from a Republican would have been cause for serious study; remember that Theodore Roosevelt was a Republican before he was a progressive. But now, it’s highly implausible that a bill, in this case one that runs 1,000 pages long, is likely to benefit either the middle class or those living in poverty.
“The Hill” reports more about the bill:
The House’s top tax writer rolled out a broad tax reform plan on Wednesday (Feb. 26) that would pare back tax breaks once thought untouchable and affect practically every part of American life.
The nearly 1,000-page plan unveiled by Ways and Means Chairman Dave Camp (R-Mich.) would pull back on the cherished deduction for home mortgage interest and embraces some ideas touted by Democrats, like scrapping the “carried interest” tax break used by hedge fund managers.
Camp said a discussion on making the tax code fairer and a more positive force for the economy was long overdue in Washington, given that the last successful tax reform effort was in 1986.
But the discussion draft, which included a summary that along ran almost 200 pages, quickly found detractors both on and off Capitol Hill, as trade groups and lobbyists found out who were the losers in the chairman’s outline.
Even before it was released, the top Republicans in both chambers had distanced themselves from the effort, with Speaker John Boehner (R-Ohio) scoffing at the possibility of a vote this year and Senate GOP Leader Mitch McConnell (Ky.) saying it would be better to do tax reform next year.
In fact, one of the few areas of bipartisan agreement is that tax reform has little chance for success this year, and some have suggested that the best-case scenario for Camp’s draft is to be a template for future efforts. But Camp was defiant, arguing Wednesday that the average person was ready for a tax code no longer littered with “special interest handouts.”
“You’re going to hear a lot about one provision or another,” Camp told reporters at a news conference introducing his long-awaited draft. “The truth is people want a simpler, fairer and flatter tax code.”
The Michigan Republican said he meets that goal by getting rid of 228 sections of the tax code, or roughly a quarter of its current 70,000 pages.
With changes to tax breaks for mortgage interest, charitable contributions, and state and local taxes, Camp also says that around 95 percent of households would be able to use the standard deduction and avoid itemizing – down from around seven in 10 right now. The deduction for state and local taxes – which Camp outright eliminates – is especially prized in Democratic states like New York and California.
But the release from Camp also acknowledges that he fell short on the House GOP goal of reducing the top individual rate to 25 percent. Roughly 99 percent of taxpayers, Camp says, will pay 25 percent or less, while the rest will face a top bracket of 35 percent.
Camp did succeed in lowering the corporate rate to 25 percent, by chopping off 2 percent a year over five years. In the process, Camp makes the prized credit for research and development permanent, while also stretching out depreciation schedules and getting rid of an accelerated cost recovery system.
Still, Camp also acknowledged that he was at times hamstrung by the fiscal cliff deal hashed at the end of the last Congress, which raised the top individual tax rate to close to 40 percent.
It appears that this bill will go nowhere fast, but in the long run, it could be a blueprint for what the GOP would like to enact if it had the legislative majorities to do so as well as the presidency. At first glance, the bill has a certain attractiveness, as any bill purporting to lower taxes would. But when I see plans like this, I hope for the kind of gridlock that has made today’s brand of Republicans famous.