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GOP tax plan challenges Democrats

While nobody expects the 979-page draft to go anywhere, the move is at least sparking some reform discussion in Washington.

By MSN Money producer Feb 28, 2014 3:01PM

House Ways and Means Committee Chairman Rep. Dave Camp, R-Mich. © J. Scott Applewhite/APBy Rob GarverEric Pianin, The Fiscal Times The Fiscal Times


For a plan labeled dead on arrival before it had actually arrived, Rep. Dave Camp's proposal to overhaul the bloated U.S. tax code has caused quite a stir both in Washington and across the country.


The 979-page "discussion draft" put out by the House Ways and Means chairman (pictured) on Wednesday has little chance of becoming law, with neither party willing to stick its neck out on such a central pocketbook issue, particularly in an election year.


The fact is, though, that Camp has started a debate that everybody agrees needed to begin, but that nobody else had the guts to initiate.


"The debate about needing to do tax reform is over," Camp declared on Wednesday at a news conference. "We have already lost a decade, and before we lose a generation, Washington must enact real, meaningful tax reform to get this economy back on track."


Recognizing that his proposal would trigger howls of protest from various groups seeing pet tax breaks on the chopping block, he said, "You are going to hear a lot about one provision or another provision, or even another provision. But the truth is, people want a simpler, fairer and flatter code."

 

It will be an uncomfortable debate for both parties, but more so for Republicans as the proposal came from their side of the aisle. Republicans had planned to coast to victory this fall by avoiding any more fiscal controversies and government crises, but will now have to respond to constituent concerns about the impact of Camp's plan on their lives.

 

Camp, House Speaker John Boehner and a raft of other House and Senate GOP leaders have scrupulously refused until now to point to even one loophole in the federal tax code they would be willing to close, for fear of offending a constituency.

On Wednesday, though, Camp pointed to dozens of tax benefits he would either eliminate entirely or change, including such sacred cows as some personal tax exemptions, interest deductions on home mortgages exceeding $500,000, the Earned Income Tax Credit for the poor, special treatment for investment income, and on and on.


The specificity of his plan left Tax Policy experts, many of whom disagree strongly with some of Camp's proposals, thrilled about the seriousness of the proposal.

 

"Camp deserves a ton of credit," wrote Howard Gleckman, a resident fellow at the Urban Institute and the editor of the Tax Policy Center's TaxVox blog. "He's spent years working on a reform plan. He toured the country promoting the idea and spent countless hours teaching fellow House Republicans what rewriting the code really means."


Gleckman found plenty to criticize in the proposal, but added, "In the end, the details of Camp's plan are less important than the fact that he wrote a plan."


Also thrilled by the plan's release -- though for completely different reasons -- were many Democrats, who see Camp's practically endless list of repealed tax exemptions and credits as a virtual smorgasbord of ingredients for political attack ads during the mid-term elections.


Claiming they had absolutely no opportunity to shape the plan, House Democrats are dismissing it as a partisan broadside at the middle class, and they intend to lash out at it on the campaign trail.


"It's a treasure trove" for the Democrats, a senior House Democratic aide told The Fiscal Times. "If you do it in a partisan way, you reap the whirlwind. Camp didn't have to do it this way. If you put it out in a partisan way, then you better be prepared for a response that's not all flowers and candy."


"Frankly, I don't understand the politics of it," Rep. Jim McDermott (D-Wash.), 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?"


"This is one step in a long road, and I was a little surprised that the Republican leadership told Camp he could go ahead and unveil this because it's going to cause heartburn for a lot of Republicans," said Martin Frost, a lawyer and former Democratic House member and leader from Texas. "It's a very complicated subject and I don't think members of Congress want to go on the record on a lot of these provisions that Camp has offered because it will offend a number of their constituents."


Not everyone was convinced that attacking Republican candidates over a proposal that will likely never even get a vote in the House will be particularly effective.

 

"This is just the latest iteration of the Democrats' spaghetti strategy," said Andrea Bozek, spokesperson for the National Republican Congressional Committee. "They're trying to throw any attack at the wall and see if it sticks, but all of the attacks are falling flat."


Ron Bonjean, a former House GOP communications director and a Washington policy adviser said, "If Republicans don't distance themselves from the plan, then they are at risk of being attacked by Democrats for threatening its adoption. However, because the plan is only a plan and not likely to be voted on, it would be pretty easy for most Republicans to simply walk away from it.


Even some longtime Democratic operatives are skeptical about possibility of scoring political points on the basis of Camp's plan.


"I'm sure that some are going to try, but I'm not sure how effective it will be," said Jim Manley, a former spokesman for Senate Majority Leader Harry Reid. "After all, this isn't a piece of legislation, just a discussion draft. Very few Republicans even felt the need to respond to it."

 

In fact, Democrats really can't be overly dismissive. Camp spent the better part of two years working closely with former Democratic Senate Finance Committee Chairman Max Baucus in search of a bipartisan approach to tax reform and he enjoys the respect of many of the Democrats on his committee. Moreover, members of both parties acknowledge that there is almost never a good time for tax reform, and at some point someone has try to force the issue.


"We need to be engaged in the big issues of the day, growing the economy, creating jobs, and have specific proposals to do that are what the American people sent us here to do," Camp told Bloomberg TV's Peter Cook Thursday. "They didn't send us here to warm a chair. So we need to try to make a difference. This is one way to do it and I'm really excited about moving ahead on it."


More from The Fiscal Times

 

 


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60Comments
Feb 28, 2014 4:55PM
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The best part of a flat tax is it removes moral ineptitude from the tax system. If you think taxes should be raised, it will effect you. You will not be able to favor increasing the burden on your neighbor, while you remain unaffected. This nation is the responsibility of all its people, not just those perceived to be well off.  
Feb 28, 2014 5:20PM
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Taxes on wages (in any form – flat or progressive) are the greatest evil of our American Republic. When government is free to steal from you, there are no limits to waste and abuse in government. If a person chooses to work extra hours or two jobs in order to better provide for themselves or their family, they should not be penalized, but that is what happens. The more you make by working harder and longer, the more money is stolen from you, and given to those who spend their lives living off the hard work of others.

The revenue the government needs to provide legitimate constitutional services should be obtained primarily from a national sales tax instead of a tax on wages. All would pay based on consumption, the more you spend the more you pay. The more luxury you surround yourself with, the more you pay. Your choice. A national sales tax system would capture money spent by criminals and by illegal aliens who currently pay near zero in taxes. There would of course need to be exemptions: Cars (already have a federal excise tax) Primary Residence/Rental Properties (vacation homes would be subject to tax/rental profit would be taxed) Fresh Food (Preprocessed foods and prepared meals would be taxed – only fresh/fresh frozen/canned goods would be exempt) Insurance Premiums, Health Care & Certified Education.

Adding another layer of tax to a business would not be fair. Businesses would need to be compensated by keeping a portion of the tax to cover the expense of collection and reporting. A percentage of .20 to .05 would be fair.

 

Feb 28, 2014 6:42PM
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No one in Washington has the intestinal fortitude to tackle spending. 
Feb 28, 2014 6:24PM
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My late father, a CPA in inland s. California, was enthused about the '86 Reagan tax reform but as a lifelong Democrat (as was Reagan for years until his father in law turned him into a GOP icon) Dad did have clients who were glad for the changes.   The IRS Code is still growing in words, and it has to be one of the most arcane, complicated document ever written. 
Feb 28, 2014 5:40PM
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It has to be better than what we have now. Of course the devil is in the details.
Feb 28, 2014 6:09PM
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Taxes SHOULD be equal.   Only socialists and communists think otherwise.  

Our founding fathers wanted equal taxation as a control against BIG government.  Their thought was if taxes are raised to high on the poor that would control taxation.

Think about this for a minute as the average WORKING person now pays in excess of 50% of their income to pay taxes.   

Our problem is the 47% parasitic class that pays no income tax.  We need these people to pay taxes and stop leeching off the rest of us.

As to corporate taxes...   Corporations do not pay taxes.   Their customers pay every dime.  They are nothing more than HIDDEN sales taxes that are added to the price of every product sold.   Companies that cannot raise prices to pay these taxes MUST cut pay of workers to do so.

Perhaps we should eliminate personal income taxes and just increase corporate taxes.   The ultimate consumption/sales tax.   Far less of a burden to collect taxes.  And much fairer.

In any case tax reform MUST not be allowed to increase revenue on dime.   We don't have a taxing problem, we have a spending problem.
Mar 1, 2014 12:24PM
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Rest assured that nothing will be done about anything in an election year. God forbid a politician of any brand actually stick their neck out  for fear of voter backlash.
Feb 28, 2014 3:56PM
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It is good to see that Republicans are willing to budge on things like corporate tax loopholes and putting a surtax on the very rich. Now if both parties could agree on other issues like farm subsides, entitlements, military purchase contracts, and getting rid of the itemized deduction we could potentially have something that would work. Both sides have to be willing to make cuts that will directly affect their constituents which is dangerous for an election year. 
Mar 2, 2014 1:12PM
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The only tax plan that we need is a 1 page plan. Most people call it the FLAT consumption TAX. Or just the Flat Tax plan. Along with a Flat Tax we would need to amend the Constitution with a Balanced Budget Amendment so that we can force these idiots in DC from spending and borrowing us into bankruptcy. I would also force them to put at least 5 or 10% into a rainy day fund that would require a super majority and the American public to vote on it before it could be used. This would get rid of the IRS, it would keep politicians from using it to buy votes and make their friends and themselves rich at our expense and it would have everybody paying something and having a stake in where we go as a country. It would stop all of this Obama BS of inequality and tax the rich BS. Taxes would be fair and the same for everybody. You spend more, you pay more. This would be the same for ILLEGAL ALIENS and tourists. The only way this is ever going to happen is for people to quit voting for these life long politicians that are as crooked as a dogs hind leg like McConnell, McCain, Reid and Pelosi just to mention a few.
Feb 28, 2014 3:57PM
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Taxation loses effectiveness at both extremes. Over complicate it and people cannot understand it and pay for an overgrown and expensive tax organization. Oversimplify it and people consider it unfair and grow bitterly resentful. The simplest is a flat tax, in which every individual pays the same amount, but the unfairness of treating rich and poor alike in this way is too evident to overlook.
Isaac Asimov (1920 - 1992)
Mar 1, 2014 5:19PM
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I hear the Democrats are responding to this Republican-offered 979-page overhaul of the tax code by reviving the old idea of a simplified one page, three-line, tax form:

1.  Enter the total amount of income you received in the tax year:     _____________
2.  Enter the total amount you spent in the tax year:                             _____________
3.  Subtract line 2 from line 1, and enter here:                                       _____________
Send in your payment for the amount on line 3 if it is greater than zero.

The word is that President Obama fully supports this legislation.
Mar 1, 2014 3:44PM
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This is like "The Trial" by Kafka where the protagonist spends the entire book trying to find out what he's been charged with.

You read this article and keep hoping you'll find out what the proposal is that "has caused quite a stir both in Washington and across the country" but you've never heard of even though you listen to the news and talk shows.

You get a little of what it's not, but nothing of what it is.  How Kafkaesque!

Feb 28, 2014 7:40PM
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Corporations will never feel obligated to pass on any TAX savings to Workers. Just as they never felt obligated to reward current Workers for their huge increases in Productivity. This Massive Right to Work Harder for Less Push sweeping the World is no different then then ongoing Push for a Flax Tax. The end Result will be exactly the same, a massive giveaway to the already Wealthy and increases in Poverty, Worldwide.

The Union of Board members and CEO types, usually one and the same, VOTE themselves massive pay increases at the expense of the Working Poor and Fading Middle-Class. They are the ones behind this Flax Tax and certainly they have pushed the Right to Work for Less Push sweeping across America. Trickle Down Economics has never worked. That has been crystal clear as the wage Gap has moved from 40 to 1 to well over 400 to1. That has been crystal clear as the Global Wealth Gap has never been Higher.

The Communist are already here, they go by the name of CEO types and Board Members. They control the Government and literally every election. You cannot HAVE Democracy when every government official is bought and paid for. We need to stop these folks from leeching off the working poor and fading Middle-class. Until that stops, we can never have a viable Tax Plan.

Mar 1, 2014 8:14PM
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 "There is a cult of ignorance in the United States, and there always has been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "my ignorance is just as good as your knowledge."Isaac Asimov
Mar 2, 2014 6:15PM
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There was never any chance any of this would hold water.  This was all political theater and you folks who believe this garbage are just part of their audience.
Mar 1, 2014 10:53AM
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Reality check mean while state local federal keep spending what they dont have putting next generation deeper in debt. Question is why does governmet continue to spend it on imports trillions when all these imports use to be made in usa. Costing three times what they spent if you add in cost unemployment health care an food stamps
Mar 3, 2014 9:23AM
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"Why should someone who works harder and sacrifices more, pay more? It’s wrong, it’s unfair. Those paying millions are supporting those paying only a few hundred dollars. If that’s 20% of your income, maybe you just need to work harder? The rest of us are tired of supporting you."

Why should anyone believe you are working harder? It's wrong and unfair that the working poor and fading middle-class are having the product of their Labors stolen by crooks at the Top simply because the top 1% have a Union of Board-members and CEO types while everyone else does not. It's this communist styled top 1% Unions that are destroying America. Too Big to Fail, Too Big to Jail has proven that.

Idiot after Idiot will come here to post how they are supporting everyone else when the FACT of the Matter is they are the ones being supported. Supported mine you at the expense of everyone else. The Real Costs of the Working Poor and Fading Middle-Class are always always overlooked. Mere Tax Rates hardly reveal the entire picture, and it never has.
Mar 3, 2014 9:15AM
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Reality Check for folks like Jacob and Clone(Someone#), the National Debt Tripled under Reagan who by the way lowered Tax Rates. The National Debt Doubled under Bush, who also lowered Tax Rates. The National Debt is on pace to Double under Obama, who by the way allowed the lower Bush Tax Rates to continue until this year.

But guess when the National DEBT didn't Double or Triple, Bill Clinton. And yes, Tax Rates were higher, and the economy was Creating Jobs along with expanding.

Now we can debate until the Cows come home to how we came to our current Debt Levels. Bottom line, that ship has already sailed. We now have to deal with it. Based on the assumption of eventually rising Rates based on Global Debt Levels, it not unreal to expect the National Debt to continually double every 8 years or less. Therefore all these talk of a Flat Tax is pure Alice in Wonderland thinking. There's a better chance of Hades freezing over.

When it's all said and done, Tax RATES for everyone will be going UP, not down. Folks are going to realize how the Social Security and Medicare Trust Funds have been stolen from the very ones now calling for a Flat Tax. Folks are going to realize that their private and or Public Pensions have been raided by the very same folks, now calling for a Flat Tax. When this all comes to a Head, the Folks now calling for a Flat Tax will calling Today's current Rates, the Good Old Days. No amount of Negative and or positive recs on a posting Board is going to change that coming Reality concerning future Tax Rates.

Mar 3, 2014 9:02AM
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"Fri 4:55 PMJacob wentz
The best part of a flat tax is it removes moral ineptitude from the tax system. If you think taxes should be raised, it will effect you. You will not be able to favor increasing the burden on your neighbor, while you remain unaffected. This nation is the responsibility of all its people, not just those perceived to be well off."

A Flax TAX just ignores the Costs and Real Life Taxes of the Working Poor and Fading Middle-Class. It's ignorance at the highest Level. This Nation and it's Wealth has been BUILT off the Labors of the Working Poor and Fading Middle-Class. Yet it's the Union of Board Members and CEO types, usually one and the same that get to determine how to slice the Wealth of those Labors.

To simply ignore that those at the bottom and in the Middle produced that record Wealth and Income yet saw very little benefit from it, is the Height of Ignorance. The Working Poor and the fading Middle-Class do all the actual Work yet the Barking Dogs get all the Credit and Benefits. This something only Hitler Types can be proud of. And guess what, it's rated best post. The dumbing down of America Continues.

Mar 3, 2014 8:55AM
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Working For Whom?

I think Monday will be my day to work for the almost seniors signing up for obocare.

Tuesday I'll work for the illegals getting my money from the government.

Wednesday I'll work for all the lazy azzes collecting welfare.

Thursday I'll work for the politicians and governments do nothing workers.

Friday morning I'll work for all the other countries my government is giving my money away too in military protection foreign welfare.

The first two hours of the afternoon, will pay for all the pigs on food stamps buying soda and junk food.

The next hour will be for all the other taxes I pay and the remainder of the day will be for me, and the state, and the mortgage company…

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