Republican Representative Dave Camp, chairman of the House Ways and Means Committee and the party’s top congressional tax-writer, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend, that the U.S. tax systems for individuals and corporations should be revamped together.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)
AL HUNT: We begin the program with House Ways and Means Committee Chairman Dave Camp of Michigan. Thank you for being with us, Mr. Chairman.
DAVE CAMP: Well, great to be here, Al.
HUNT: You want to take on tax reform this fall. You want to do individual and corporate and business. A number of Democrats and a few Republicans say the individual is just too tough a slog right now. Would you consider breaking off and just doing corporate?
CAMP: Well, it’s really important we do both, Al. The economy isn’t recovering. The fundamentals aren’t strong. This month’s jobless numbers show that the worker participation rate or the level of workforce is the lowest since the Carter administration and going down. So we really need to do both, because most business activity now is done in what we call the pass-through or individual form.
CAMP: So if you didn’t do individuals, you’d have Main Street at 44.6, the top rate, and the corporate at 25 to 28.
HUNT: But they could switch to corporate if they wanted to.
CAMP: Well, they could switch to corporate, but what about families? And the fact that people, you know, don’t have the jobs they need and -
HUNT: So you are adamant it’s got to be individual, as well as -
CAMP: Absolutely. It needs to be - for the economy. For the American people.
HUNT: Well, let me ask you about both, then. The corporate rate you want to lower to 25 percent. Obama says 28 percent. That’s negotiable?
CAMP: I think certainly that puts us in the ballpark. Now, many of the folks that have come to us think that 25 is the rate they need to get to, to close all the loopholes, to get the sort of rate reduction we need. But the reason we are at 25 is that’s the OECD average, and we need to make sure that our businesses are able to be competitive as they go around the world, so 28 would put us out of that range.
HUNT: So, therefore, negotiable, but not at 28?
CAMP: Well, look, I’m glad the president’s involved in the issue. We need to move this issue forward. And I don’t think that’s necessarily an impediment to moving ahead.
HUNT: You also would take the individual rate to 25 percent. That would lose $3.8 trillion of revenue just by itself. Would you be willing, as Ronald Reagan did in 1986, to treat capital gains and dividends as ordinary income, then, increase those taxes?
CAMP: We’re certainly going to look at that. Obviously, I think the goal is, how do we get, you know, families in a better position? First, how do we get a simpler, fairer, flatter tax code? And one of the things that’s driving Americans crazy is the complexity of this tax code. They send something to the IRS, and they don’t know what their responsibilities are going to be. And obviously, with this IRS, that’s a real problem. But if we can get to 25, if we can get the kind of growth that we might see, and obviously, in a static score -
HUNT: And that would be easier to make capital gains then ordinary income, right?
CAMP: It would be. But I think the real important thing is to get the policy right. We got to get that rate low. And we’ve got to make sure that we have the kinds of policies that will grow this economy.
HUNT: Still trying to find out if we’re going to get…
CAMP: It’s sure on the table
HUNT: Is - is - is the home mortgage deduction and charitable contributions, is that - are they on the table?
CAMP: Well, I wouldn’t consider those loopholes. Those are important provisions. And obviously, we’re going to need to make sure that we have a consensus to move ahead. But I think there’s a way to move ahead on both of those issues that either - first of all, a growing economy helps the housing market. A growing economy helps people give more to charity. Those issues don’t necessarily track tax policy as much as they do growth, so what we need to do is if we can get a stronger economy, people will buy houses and they’ll give to charity.
HUNT: But would you consider those tax provisions as part of your bill where you might reduce them, you might change them, you might alter them?
CAMP: You might be able to alter them. They don’t necessarily have to be eliminated to get to 25.
HUNT: OK. You said the other day you’re thinking about running for the Senate. Now, you can’t possibly work for months and months on a tough tax reform bill and launch a huge Senate campaign in Michigan. I guess my question is, if the - if the House Republicans would waive the term limits as chairman, would you stay as Ways and Means Committee chairman, too?
CAMP: Well, obviously, that would certainly be something I’d put in the mix. Look, this is - that’s a big decision. It’s an important state, a big state. A lot of people have urged me to take a look at it, and I think I owe them the respect of taking a serious consideration, because I think so much of the people who’ve talked to me about it.
HUNT: But how long do you think it’ll take you to do tax reform?
CAMP: Well, I’m hopeful that at least in the committee, which is really the area that I hope I can impact, will be this fall. And certainly by the end of the year -
HUNT: So you think you can finish - you think you can finish a bill through the Ways and Means Committee for individual and corporate tax reform by December?
CAMP: Look, we’ve been working on this for two-and-a-half years. Between the House and the Senate, we’ve had more than 50 hearings. We’ve had 11 working groups on this. A lot of this has been done, whether it’s in Simpson-Bowles, you know, in presidential commissions or other areas. These issues have been on the table for a long time.
HUNT: So if you finish it by December, you then have to have the Senate take it up. I’m getting to the Senate race now. You have to go to a conference eventually. Is that going to be - are you going to have to make a choice between tax reform and running for the Senate?
CAMP: Look, I always knew I was going to be on the ballot. We run every two years in the House. I just don’t know where I’m going to be on the ballot at this point.
HUNT: When will you make that decision?
CAMP: Sometime soon.
HUNT: I mean, by - by January?
CAMP: You know, it’s not to imagine - I think certainly by January, I’ll be able to know whether I’m going to do one or the other.
HUNT: OK. Let’s - let’s talk about the Democrats for a moment. First of all, they insist there be no dynamic scoring. I assume - now, you concur with that, right?
CAMP: Well, the only problem with that is it’s in the House rules. So the House of Representatives is going to require dynamic scoring, but we’ll also have a static score, which the Democrats want, as well, and we do, too.
HUNT: OK. The Democrats also say this has to be a net revenue raiser, because we have this huge deficit problem. Is that negotiable?
CAMP: The House bill is going to be revenue-neutral. I think it’s very important, with the huge taxes that - revenue that were raised at the end of the day, $600 billion or more, with the economy not recovering, we need to now look at growth. And that’s why it’s so important - when former Leader Dick Gephardt and former Secretary of the Treasury James Baker came together and testified before our committee, they together said, to really get this done, you need to be revenue-neutral. Otherwise, it comes apart before it starts, because people say, ‘why should I pay for those tax increases?’
HUNT: Can you get Democrats with a revenue-neutral bill?
CAMP: Look, we want to get the policy right. And I think to get the policy right, you need to have a revenue-neutral bill. Otherwise, it comes apart.
HUNT: Do you have to have a Democrat - Democrat sponsors, too, Democrat support, bipartisan?
CAMP: This - this has been a very bipartisan process. Our 11 working groups have had one Republican and one Democrat leading them -
HUNT: But in the end, do you have to have Democratic support for this bill?
CAMP: Well, ultimately, I think to have a Republican House, a Democrat Senate, and a Democrat president sign a bill, it needs to be bipartisan.
CAMP: It doesn’t mean every issue will be bipartisan as we move through this.
HUNT: When the president said he wanted tax reform, corporate tax reform, but he also wanted to use some of the revenues to pay for infrastructure, to help workers, would - did that advance the cause or impede the cause of corporate tax reform?
CAMP: I think the idea that we’re doing this for more spending at this point is not the approach I would take. But, look, I’m glad the president’s at least talking tax reform and has put it on the table, particularly revenue-neutral corporate reform.
But to do the kinds of revenue increases that many Democrats are talking about - Harry Reid I think has said almost $1 trillion - the only way you could have that revenue is to raise taxes on the middle class. That would be the wrong approach. That would be something that would actually hurt the few bright spots we have in the economy.
HUNT: Mr. Chairman, in this process, is it possible to consider a carbon tax or a value-added tax, you know, as a partial replacement?
CAMP: I think another layer of taxation only complicates the code. And actually, those are taxes that are very easy to raise. I think what we really need to do is have a code where the average American can fill out their own taxes -
HUNT: So you’d take those off the board?
CAMP: I would take those off the table.
HUNT: American corporations have as much as, what, I think $2 trillion parked overseas. And you’ve proposed that they could bring it back and pay, I believe, a 5 percent toll. My question is, would you give a break to companies that have non-liquid foreign assets and would have to borrow or sell to pay?
CAMP: Well, there is a difference, obviously, between the non-liquid assets or the sort of intangibles that are overseas. The important point here is that we do need to get those dollars that are trapped overseas flowing back on a regular basis, so they’re not invested over there and become hard assets, but we also are going to have to have a strong what we call base erosion provision, which that - intangibles which are easy to move around the world in today’s world, that they’re done - that there’s some safeguards so they aren’t just moved to either zero or low-tax jurisdictions, and there’s a reward to keeping that intellectual property and those intangibles here in the United States.
This is why we need tax reform. The world has changed since 30 years ago, the last time we did this -
HUNT: So you might give an extra break to those that do have the non-liquid foreign assets?
CAMP: We would give a break to recognize there’s a difference between what’s liquid and illiquid that’s trapped overseas, but more importantly that we’d have an incentive for keeping those intangibles here in the United States.
HUNT: You are going to probably have to whack away at depreciation deductions as part of the corporate tax reform. That’s going to be great for a Microsoft, with the lower rates, but isn’t that going to clobber a lot of manufacturing firms?
CAMP: I think what the important thing is, is that we - we have a simpler code. And we’ve had a lot of testimony on this. And it’s certainly something that we’re going to look at. No final decisions have been made there.
But what we’re going to have to do is have a code that doesn’t pick winners and losers, that is - some of these provisions, you know, flipping a hamburger counts as manufacturing. So I think we have to make sure that we have a code that is transparent, that’s fair, that’s easy to understand, both for individuals -
HUNT: That sounds like depreciation -
CAMP: - and business.
HUNT: That sounds like depreciation is on the chopping block.
CAMP: We’re going - we’re looking at it, certainly.
HUNT: OK. Let me ask you about the IRS. You spent time - Darrell Issa, it seems, has spent a lifetime looking at revelations about the IRS. I know you’re upset that the head of the tax-exempt group said something to the FEC, but let’s stay away from that for a minute. Have you seen anything, anything at all, that would suggest that the Obama White House applied any political pressure?
CAMP: One of the things that we don’t have yet is all the information.
HUNT: But from what you’ve seen, do you see anything?
CAMP: From what I’ve seen so far, I don’t see any direct White House involvement. But we only have about 3 percent of the documents that we’ve asked for. And what we really need, Al, are the e-mails. We don’t have those yet.
So this investigation is continuing. I wish that we were getting these documents faster in a more productive way and we could maybe conclude this, but we can’t, because we don’t have the full information.
HUNT: OK. Chairman Dave Camp, have a wonderful August recess. I understand the Max-and-Dave show will be on the road again.
CAMP: That’s right.
HUNT: But thank you very much for being with us.
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