Camp Nears Decision on Biggest Tax Changes Since 1986
Representative Dave Camp, the top Republican tax writer in Congress, emerged from a meeting with party leaders today without a firm timeline for action after working for almost three years on revisions to the tax code.
Camp, chairman of the House Ways and Means Committee, wants to push legislation through his panel to lower individual and corporate tax rates and curtail breaks in the most significant change to the Internal Revenue Code since 1986.
The details of his plan, which Camp started developing when he became the panel’s chairman in 2011, are “very close” to being done, said Representative Charles Boustany, a Louisiana Republican on the committee.
“I’m going to continue to move ahead on the bill and continue to refine it,” Camp said after the meeting. No decision was made about the timing of a release, he said.
Politics are another matter. Republicans are wary of siphoning attention from the flawed start of President Barack Obama’s 2010 health-care law and toward a bill that would impose higher burdens on some taxpayers while benefiting others.
Camp, 60, said for the first time yesterday that he may not meet his self-imposed deadline of releasing a bill and moving it through the committee this year. His Senate counterpart, Democrat Max Baucus, postponed a closed-door bipartisan meeting set for today to discuss members’ concerns.
The 16-day partial government shutdown last month set back the committee’s work by three weeks, Camp said. House members are scheduled to be in session for 14 more days this year, counting today, before they plan to leave Washington on Dec. 13.
“I very much have wanted to stick to that, certainly to have the bill ready and to be able to move forward this year if we can,” Camp said. “Things do change around here and I think you have to look at the timing and circumstances you’re in.”
The leaders can’t stop Camp from releasing a bill. They may, though, urge him to wait, say they would withhold support if he moves ahead or ask other party members to tell Camp that they oppose his plan.
Camp, of Michigan, said he has thought about whether the Ways and Means Committee could do something short of moving a complete bill this year to make some progress. He said that idea isn’t being actively considered.
The tax bill is a party priority that would advance a goal Republicans have embraced in their budget each year since winning the House majority in the 2010 elections. What they haven’t done is add all of the details, showing which taxpayers would win and who would lose.
A major tax bill would affect multiple industries and markets, including states that issue tax-exempt municipal bonds, companies such as retailer Macy’s Inc. (M) that advocate lower corporate tax rates, and individuals who receive tax-free health insurance from their employers.
Republican leaders are concerned about the lack of a path to a tax law before this Congress concludes at the end of 2014, given their opposition to raising taxes and Democrats’ insistence that major tax-code changes be accompanied by revenue increases, said three Republican aides who spoke on condition of anonymity to discuss party strategy.
Camp has said that his plan wouldn’t raise or lower federal revenue and that it wouldn’t shift the tax burden from higher-income households to others.
“The revenue question hasn’t gone away,” said Representative Richard Neal, a Massachusetts Democrat and senior Ways and Means member.
Still, Neal said, there are plausible paths for Congress to succeed before the end of 2014.
“Nobody likes the current system,” he said. “The argument’s over what the new one should look like.”
Revenue has become part of lawmakers’ debate over tax-and-spending issues with the U.S. budget deficit in mind. The U.S. Treasury Department yesterday released a report saying the budget deficit narrowed last month, even as the federal government was closed down for part of it. Spending exceeded receipts by $91.6 billion last month, compared with a $120 billion shortfall in October 2012.
Stronger hiring has helped reduce the country’s budget deficit as a share of gross domestic product by more than half in the past four years, narrowing it from a record $1.42 trillion in 2009.
The Treasury last month said the shortfall in the 12 months ending Sept. 30 was 4.1 percent of GDP, and the Congressional Budget Office has projected it will decline to 3.3 percent of the economy this fiscal year and 2.1 percent in 2015.
On the tax front, Camp has held details of his plan closely, particularly those on politically charged issues such as the mortgage interest deduction, capital gains rates and the tax exemption for credit unions.
He has been holding a series of closed-door meetings with his committee’s Republican members over the past few months as they try to draft a proposal. The goal is to lower the top individual rate to 25 percent from 39.6 percent and the top corporate rate to 25 percent from 35 percent.
Camp has released discussion drafts of changes to the taxation of international income, derivatives and small businesses.
Camp has been working with Baucus, the Montana Democrat and chairman of the Senate Finance Committee. They have a joint Twitter handle on their goal of revising the tax code and went on a multi-city tour earlier this year.
Baucus plans to hold a closed-door meeting next week with committee members from both parties as he prepares to release as many as three discussion drafts of his own.
Probable subjects for those drafts include the taxation of U.S. companies’ foreign income, tax administration and capital cost recovery, said Senator Rob Portman, an Ohio Republican on the Finance panel.
“Senator Baucus wants to take some additional time to talk to members and hear the concerns expressed by some before deciding on a path forward,” said Sean Neary, a spokesman for Baucus.
Republicans want Baucus to wait until after budget negotiations conclude to keep the two issues separate, said Antonia Ferrier, a spokeswoman for Orrin Hatch of Utah, the Finance Committee’s top Republican.
Hatch told Baucus that waiting would be prudent, Ferrier said.
“There’s a bipartisan desire to fix America’s broken tax code, but there’s also a partisan desire by some to raise taxes under the guise of so-called tax reform,” she said.
The budget talks have a Dec. 13 deadline, and Democrats want to use them to make tax changes such as ending the preferential treatment of private equity managers’ carried interest.
To contact the editor responsible for this story: Jodi Schneider at email@example.com