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House Ways and Means chairman Dave Camp, a moderate Republican from Michigan, has released a 979-page taxÂ reform billÂ – and, in the journalistic parlance of theÂ Times, itâ€™s a â€śsweepingâ€ť one. The bill promises whatÂ Camp callsÂ a â€śsimpler, fairer tax codeâ€ť, cuts middle class taxes, and eliminates some of the more common tax breaks. It also seems to have no realistic chance of passing. Senate majority leader Mitch McConnell — also a Republican — said, â€śI have no hope for that happening this yearâ€ť.
However futile, Campâ€™s bill is notable in that it changes the economic conversation on tax reform.Â Reihan SalamÂ is excited about the bill, even if itâ€™s doomed.Â Jonathan ChaitÂ says the bill â€śmay be the most impressive and ambitious domestic policy proposal crafted by a major Republican in a generationâ€ť. Instead of the standard Republican rhetoric on cutting taxes, Chait says, the Camp bill focuses on eliminating tax breaks.
MarketWatchÂ has a list of some of the major tax breaks that would be affected: the mortgage interest deduction would be capped at $500,000, state and local income taxes wouldn’t be deductible, and the bill would end breaks for sports leagues (take note,Â Roger Goodell). The measure would alsoÂ end tax breaksÂ for many private equity partnerships (take note, Blackstone).
Felix writesÂ that the bill resurrects the long-dead idea of a bank tax, which was an Obama priority in 2010. â€śIt is Pigovian tax on something (too-big-to-fail financial institutions) we donâ€™t want, and often Pigovian taxes are more effective than regulation when it comes to minimizing such thingsâ€ť. The Cato Instituteâ€™sÂ Mark CalabriaÂ worries that the 0.035% tax on assets above $500 billion would â€śturning the banks into a revenue stream for the federal governmentâ€ť — a la Fannie and Freddie.
TheÂ Center on Budget and Policy PrioritiesÂ writes that the plan relies on some budget gimmickry to be revenue neutral over the first 10 years. Perhaps more troublingly,Â the CBPPÂ says that by cutting the Earned Income Tax Credit, the bill could leave a working mother with $2,000 less each year. For what itâ€™s worth,Â studiesÂ have found the EITC is quite effective atÂ alleviating povertyÂ and promoting work.
James PethokoukisÂ says the bill marks the end of an era: â€śthe Age of Tax Cuts is over. But the Age of Tax Reform has not yet arrivedâ€ť.Â Stan CollenderÂ says the bill destroys any hope of getting tax reform done this year — the bReill raises taxes on key Republican constituencies, he says, and Camp is on his way out as chairman of the House Ways and Means Commission.
ToÂ Joshua Green, the most surprising thing about the bill is that it was put forth at all: both parties have mostly stopped making laws for the year and are preparing for the midterm elections.Â – Ryan McCarthy
On to todayâ€™s links:
Correction: This post has been updated to reflect the fact David Camp is in fact a representative from Michigan, not Texas.