GOP eyes big reforms for nation’s tax code
The Internal Revenue Service (IRS) building in Washington, DC, February 19, 2014.
After nearly three years, U.S. Congressman Dave Camp (R-Mich.) is expected to unveil his plan to overhaul the nation’s tax code on Wednesday. While the details are not expected until then, two elements caught the eye of Roberton Williams, a fellow at the Urban Brookings Tax Policy Center: lower top income tax rates and eliminate loopholes.
“It neither changes the amount of revenue we bring in, nor does it change who pays taxes, the rich, the poor, the middle class,” he says.
What Camp’s plan does do is lower the top rate from nearly 40 percent to 25 percent, and collapse seven existing tax brackets into two, 10 percent and 25 percent. There’s also a surcharge on on earned income over $450,000 a year.
How does Camp plan to pay for these changes? George Washington Economist Joseph Cordes says that “the many ‘tax loopholes,’ tax expenditures that are in the code currently, would have to be scaled back or eliminated,” he says.
The problem according to Cordes is that many exemptions, like the home mortgage deduction, are politically popular and could be a difficult pill to swallow on Capitol Hill. Either way, he says this is a serious proposal and potentially the start of something.