Former chairman: deductions can pay for GOP tax reform
When Dave Camp was chairman of the House Ways and Means Committee he drafted an overhaul of the tax code that was able to reduce headline corporate tax rates to 25% and simplify personal tax rates into 3 brackets of 10%, 25%, and 35%.
Why it matters: Camp, who now serves as a Senior Policy Advisor at PwC, was able to cut rates in his 2014 effort because he took an axe to cherished deductions like those for charity, mortgage interest and state and local taxes. His plan didn't survive in an election year. In an Axios interview, he says the latest tax reform efforts may run into similar obstacles.
His 2014 blueprint was a starting point: "There's a number of similarities [between the Camp plan and the House GOP's] on the individual side."
But the GOP plan avoids third rails: "The two most challenging deductions to address are the charitable giving and home mortgage deductions — they have a lot of political support."
On whether the tax code should be made more progressive to battle rising income inequality: Camp says that the income tax is already very progressive, but admits that when you look at overall taxes, including sales, property, and state and local income taxes, the U.S. tax system is less progressive. "That's an issue you have to deal with," he says.
On the border-adjusted tax: Whether it's a good idea "really depends on how it's structured," within the context of the entire reform package. He says we should wait to hear what the Joint Committee on Taxation says about the plan before drawing any conclusions as to its effects, like whether it would raise consumer prices or the value of the dollar.
Corporate and personal tax reform should be addressed at the same time: Personal and corporate taxes aren't so distinct, given that many companies pay taxes through the individual tax code as passthrough entities.
Asked whether he believes competitively cutting corporate tax rates to encourage Corporate America to stay in the U.S. puts too much power over policy in the hands of multinational corporations, Camp replies "Many companies have already taken advantage of lower rates in other countries, and the question is do we not reform our tax system and see companies redomicile for tax purposes, or do we try to get more competitive."
On whether he's envious of the GOPs opportunity for major reform, or happy to have escaped the political scrum: "It's an exciting time, but because of term limits I had to give up the chairmanship. I'm cheering from the sidelines and am optimistic that they get something done."