Congress’ Tax Chiefs Pledge Bipartisan Path to Rewrite

The top two tax writers in Congress pledged to continue work on a rewrite of the U.S. tax code that would lower rates and subject more income to taxation.

Senator Max Baucus, a Montana Democrat, and Representative Dave Camp, a Michigan Republican, wrote that they will produce bills and work together in an “open and transparent fashion” that allows for public input.

“People from across the spectrum are trying to turn tax reform into a political weapon, which could end up killing any chance at success,” they wrote today in the Wall Street Journal. “We can’t let that happen.”

Camp, 59, is chairman of the House Ways and Means Committee and was first elected to Congress in 1990. He has released three discussion drafts of pieces of his tax plan and has said his committee will approve a bill this year.

Baucus, 71, is chairman of the Senate Finance Committee and has been in the Senate since 1978. He has moved more slowly than Camp and hasn’t set a time frame for action. His panel has started closed-door meetings on the tax system.

As an example of a break they will seek to curb, Baucus and Camp cited the ability of some lawyers and celebrities to avoid payroll taxes on their income. That’s a strategy that gained attention because of its use by two former presidential candidates: Republican Newt Gingrich and Democrat John Edwards.

Professionals who own businesses, as Gingrich and Edwards did, can direct their compensation to be paid as profits and not as wages subject to the payroll tax for Medicare, which has a top rate of 3.8 percent.

Baucus and Camp also wrote that the tax code would remain as progressive as it is now and said they would “ensure that low-income and middle-income Americans will pay no more taxes than they do under current law.”

The House Republican budget, which includes instructions to Camp’s committee, doesn’t set a progressivity target.

Before it's here, it's on the Bloomberg Terminal.