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Wednesday, October 26, 2016

Republican Congressman Introduces Tax Plan, Lawmakers From Both Parties Hate It

Republican Congressman Introduces Tax Plan, Lawmakers From Both Parties Hate It

In a bold legislative move, Rep. Dave Camp (R-MI), chairman of the House Committee on Ways and Means, introduced legislation on Wednesday that would significantly reform the federal tax code in the United States.

“I’m not satisfied with waiting,” Camp told reporters on Wednesday. “I’m not going to settle for two percent growth and median incomes declining and more kids living with their parents. I want to see growth, I want to see jobs, I want to see higher incomes — tax reform can raise that.”

The bill includes measures that are popular among Republicans, like lowering the top corporate and individual tax rates. The bill would also simplify the tax code by collapsing seven separate tax brackets into three.

But instead of throwing their support behind one of their most important committee chairs, GOP leaders are running from the plan — and throwing Camp under the bus.

“It’s one chairman’s bill,” Rep. Greg Walden (R-OR) said dismissively.

House Speaker John Boehner (R-OH) isn’t prepared to back the bill, either. Rather, he says it should be seen as a jumping off point for a larger conversation. “You’re getting a little bit ahead of yourself,” Boehner said when asked if Camp’s plan is the Republican Party’s plan. “We’ve talked about this and Chairman Camp’s worked on this for years. It’s time to have a public conversation about the issue of tax reform. And so I welcome the conversation.”

Why does the GOP have cold feet?

For starters, the bill includes divisive provisions that the GOP leadership is not prepared to introduce in an election year. While Republicans would love to tout a lower corporate tax rate to its base, explaining a new surtax on the wealthy may be more difficult. According to the Associated Press, the plan would include a 10 percent surtax on earned income above $450,000.

That isn’t the only provision that makes Republican lawmakers leery of the bill.

It also includes a stipulation that would end deductions for state and local taxes. As of now, taxpayers can itemize deductions from state and local taxes from their taxable federal income. Camp’s proposed bill would end this tax break for individuals.

The provision that ends state and local deductions has sparked heated debate between influential Democratic lawmakers and their Republican counterparts.

As Talking Points Memo’s Sahil Kapur points out, the states that benefit most from the state and local deductions are Democratic strongholds like California and New York. Senator Chuck Schumer (D-NY) had this to say about a bill that would end the deductions: “Any proposal that eliminates the deduction for state and local taxes, as the Republican plan would do, is dead on arrival.”

Even though eliminating deductions for state and local taxes does have some support within the GOP, it may not be the debate Republicans want to have in an election year.

Democrats seem eager to play offense against the bill. “Frankly, I don’t understand the politics of it,” Rep. Jim McDermott (D-WA) told Politico. “He knows it’s not going anywhere, but it will be used” against his colleagues. “The question will be: Do you support Dave Camp’s bill?”

Rep. Bill Pascrell (D-NJ) piled on: “It doesn’t make sense. You don’t send up trial balloons on such significant issues — particularly in an off-year election.”

Some Democrats also argue the bill will further disadvantage working families and the working poor. As the Center on Budget and Policy Priorities points out, Camp’s proposal includes changes to the Earned Income Tax Credit (ETIC) and the Child Tax Credit (CTC), which will push poor families further into poverty.

The Center on Budget and Policy Priorities explains: “A mother with two children who works full-time year-round at the minimum wage (earning $14,500 by working 2,000 hours at the $7.25 minimum wage) would lose about $2,000 in 2018 (when the plan’s changes in these credits would take full effect) compared to current policy — that is, compared to the CTC and EITC policies on the books today.”

Photo: Casey Konstantín via Flickr

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  • Lynda Groom

    I will begin to take the various GOP tax plans seriously when they become serious documents. All one has to do is look into the ‘Citizens for Tax Justice’ study entitled ‘The Sorry State of Corporate Taxes: What Fortune 500 Firms Pay (or don’t pay) in the USA and What They Pay Abroad–2008-2012’ to see the elephant in the room.

    Here are some of the highlights, or lowlights if you prefer, that tell the story. A full 111 of the companies enjoyed at least one year in which their federal tax was zero (0)

    A full 26 companies, including Boeing, GE, and Verizon, enjoyed negative income tax rates over a five year period, despite combined pre-tax profits of $170 billion.

    Of the 125 multi-nations in the sample, 2/3 paid a lower U.S. tax rate than they paid abroad. On average they paid 12% larger tax rate than their effective U.S. rate.

    The total amont of Federal income tax subsidies enjoyed by the 288 profitable corporation over the five years was $362 billion.

    Wells Fargo tops the list of those ‘taker’ corporations getting more than $21 billion in tax breaks from our treasury from 2008-2012.

    More than half of the federal corporate tax subsides went to companies in four industries. Financial services, utilities, telecommunications, oil & gas and pipelines.

    When gentlemen like the good congression want to get serious and actually address the revenue problem created by this travesty I will start to listen to him and his ilk.

  • paulyz

    It has been shown as fact that the top 10% of wealthiest pay 71% of taxes. They are already hit hard by the Federal government. Also, something like 43% of Americans pay ZERO income taxes. So all this talk of income inequality and the rich getting all the breaks is mostly false. It is a political move to have people “blame” someone else for the terrible economy.

    • Jim Myers

      You need to quit smokin’ the whacky weed. It clearly is reducing your ability to think.

      Granted, the top 10% of the wealthiest do pay 70% of all income taxes collected, however, they earn over 50% of all income generated in the United States.

      Given the popular theory that 47% of all earners pay no income taxes, that leaves the 43% who do pay taxes, but are not in the top 10% of earners, paying the other 30% of all taxes.

      That may seem unbalanced, until you consider the actual cost of living as a percentage of income.

      If you consider the cost of living at only $10,000 per adult, and another $5,000 per child, a family of four has a base expense of $20,000.

      Mind you, a family of four with an income below $23,000 is considered to be existing on poverty level income.

      The 2012 “medium” income was $50,054, which is skewed by the extremely high income of the top 10%.

      In 2008, the “average” American taxpayer earned about $33,000.

      That means the “average” family with two children are paying roughly 30% of all income taxes out of the $10,000 that is above poverty level income.

      The “medium” income taxpayer paid their “share” of taxes on the $27,000 that is above the poverty level.

      And, yet, they are paying that 30% based on medium income. So, part of that tax load is based on numbers skewed by the very rich.

      Now, a flat tax on income above, say $46,000 for a family of four, would be reasonable.

      That $46,000 figure is only twice the poverty level.

      However, it would need to be a TRUE flat tax, without any deductions.

      Of course, that should also apply to all business income as well.

      Just sayin’.

      • BillP


        The right wingers always trot out these numbers as if they show that the top income people pay more than their share of taxes. They forget to show that the top 1% in 2011 paid an average “effective” Federal tax rate of 23.4% with Mitt Romney paying an effective rate of 13.9% on an income of over $21 million. Most of his income comes from interest, dividends and capital gains that are taxed at either 15% or 20% not a nominal rate that should be at the maximum. It amazes me how these rig wingers on here always want to protect the wealthy who most likely are paying a lower effective tax rate than they are.

      • Allan Richardson

        The MEDIAN income cannot be skewed by the large incomes of the top 1%, although the MEAN (which is colloquially called the “average”) is skewed. For example, if Bill Gates walked into a bar (cue the joke) to join 20 regular workers, the MEAN (or average) income would go up to maybe 100 million, just because he was there. The MEDIAN, or middle number, would go up from the sum of the 10th and 11th lowest salaries, to the 11th lowest exactly. This is why statistics regarding the NUMBER of individual cases, where there is a wide distribution of values, often use the median rather than the mean.

        • Jim Myers

          Thanks for clarifying that. I never seem to get it correct.

    • Lovefacts

      Without stating actual income versus taxes and cherry-picking your figures, you lose credibility.
      Here are some FACTS that also include your 71%.
      1. The top 1% earned 1/3 of all income in the US.
      2. Because the majority of income by the 1% is treated as unearned or like hedge fund managers’ deferred interest, they paid a lower percentage in taxes than those with earned income.
      3. The top 10%, reaches down to $77,500/year, which is actually middle class. And it’s been a long complaint of the middle class that they pay more than their share per dollar made.

      If we really want to get rid of income inequality–as far as taxes are concerned–we should treat ALL income equally. Income is income. One should not be treated as having more value than the other–unless it’s earned via illegal means.

      As for blaming someone, I blame:

      1. Our elected officials who are more worried about their next election than the country.

      2. The tax code for its inequality on personal taxes.

      3. The Republican lies about overtaxing corporations, when truth shows the opposite. Corporate taxes in the U.S., contrary to the constant protestations of conservatives, are at a 40 year low,

      Corporate titans such as General Electric, Boeing, Verizon, and Matte–to name a few–paid nothing. That only four companies that slipped into positive tax territory were DTE Energy, Honeywell, Wells Fargo, and DuPont, with DuPont the only one that paid more than 4 percent over the four years.

      According to a 2012 analysis by USA Today, among companies listed on the S&P 500, almost one in nine (that means 9 point something) paid an effective tax rate of zero percent — or even lower.

      It’s time Americans stopped blindly believing the Chamber of Commerce, Fox News, and either Republican or Democratic talking points, plus knew US and world history, how economies worked. Oh, It’s okay to disagree with positions taken by your political party. It’s called being an adult and thinking for ourselves. Try it, you’ll find it invigorating.

    • howa4x

      90% of the stimulus went to the top 1% with the bailout of Wall street. the 1%’s wealth went up 756% with the bush tax cuts. What % did yours go up, 2-3? Right now the 1% control upwards of 80% of the wealth in this country. So where are all the jobs they created with all that largess? What part of the economy came back? Wall st. The stock index has passed 16,000. It was 600 when Obama took over. They are the only ones made whole by the collapse they caused. Now you want to reward them again? Or as the CEO of Goldman said” we needed high unemployment while we were recapitalized”. So the wealthy need to get back to where they were and used our tax dollars to do it. Now you on the right don’t want them to pay anything more.
      Well who is going to repair our crumbling infrastructure? Who is going for pay for education? it is you the stupid ass licking middle class, while the rich pay less you will pay more. wow that makes a lot of sense.

    • ThomasBonsell

      Not true.

      You conveniently overlook the fact that the 43% you claim pay ZERO income taxes do pay the payroll tax. And last I saw the payroll tax and income taxes received by the federal government differ by one percentage point. And the payroll tax hits the first dollar earned, it is not subject to numerous deductions, writeoffs or other evasions.

      In the last year before I escaped the workaday world and started living off my investment incomes, I paid 33.26% of income (both income tax and payroll tax). Mitt Romney paid 13.9%. And that apparently was the year he paid the most, because that was the only year he admitted to paying taxes. So, let’s get off this kick that the poor millionaire suffers under our tax codes.

      Then we have the Ronald Reagan factor. Sir Ronnie was hailed as a wonderful hero during his reign of error because he heroically saved millions of Americans from the dreaded income tax (millions he forced down into poverty). Now those same Americans rescued by Sir Ronnie are derided as bums, loafers and free loaders.

    • JSquercia

      Give us a break Pauly . All I Know is that Mitt Romney paid a lower Marginal Tax Rate on his income than I paid on my Social Security Tax . The former thanks to the favorable tax treatment of Divivdends and Capital Gains and the later thanks to Reagan making Social Security Benefits Taxable . Ronnie said the tax would ONLY impact so called “upper Income” recipients . The problem is they never indexed it for inflation .It stands today at 25,000 for singles and 32,000 for married couples and it make matters work it considers 50% of your benefit to taxable income . Ronnie hated that you were getting the benefit of the employer match so he decided to make that taxable in this Calculation . Same idea why Unemployme