Winners and Losers Under the Camp Tax Plan
Dave Camp
Printer-friendly versionPDF version
a a
 
Type Size: Small
The Fiscal Times
February 28, 2014

One of the reasons why members of Congress are reluctant to wade into the swamp of tax reform legislation is that any such proposal inevitably creates a lot of winners and losers. And, there is often little political benefit for the politician sponsoring the bill. “The losers are going to complain loudly, and the winners are diffuse aren’t going to celebrate too much,” said Jonathan Traub, managing principal of the tax policy group at Deloitte Tax.

Despite the political peril, Rep. Dave Camp on Wednesday released a sweeping proposal to reform the tax code. The most dramatic change in his plan is the reduction of seven tax brackets to two—10 percent and 25 percent for all taxable income. Here’s a list of the folks who will be complaining the loudest on some of the other changes, and those who will be quietly congratulating themselves.

Related: Camp’s Courageous Tax Plan Is Bashed by All Sides

Losers:

LoserReason
EITC RecipientsThe Earned Income Tax Credit will be significantly less generous, though says other changes could offset the changes.
JetsettersCompanies with corporate jets would have their wings clipped by the plan’s elimination of a tax break creating special depreciation rules for jets.
Big BanksLarge financial firms – specifically those classified as “systemically important” under the Dodd-Frank Act – would face a new “excise tax” based on their consolidated worldwide assets.
H&R BlockTax preparation firms can’t be thrilled that 95 percent of filers will no longer need to itemize their deductions to get their maximum refund. The 1040EZ just got easier.
Fund ManagersHedge fund and private equity fund managers would no longer be able to classify the “carried interest” payments they receive as investment income; the money would be taxed at the higher rate reserved for regular income.
Video game creatorsThe Camp proposal makes a research and development tax credit permanent for most businesses, but specifically bars the makers of “violent” video games from taking advantage of it.
Nick SabanA 25 percent excise tax is imposed on compensation in excess of $1 million paid by a tax-exempt organization to one of the top five highest paid employees.  Nick Saban—welcome to the NFL.
Divorced peopleAlimony payments will no longer be tax deductible.
Taxpayers in High Tax StatesThe Camp plan repeals the deduction of state and local income, property, and sales taxes.
The NFLThe proposal repeals the existing tax exemption for professional sports leagues. (Okay, not just the NFL – but paying Commissioner Roger Goodell $30 million might have brought this on.)
Renewable EnergyCamp would eliminate tax breaks targeted specifically at alternative energy firms.
Future homeownersThe mortgage interest deduction is capped at $500,000.
TaxpayersDeductions for state and local taxes are no longer allowed.

Winners:

WinnerReason
SeniorsThe proposal would create a simplified tax form for individuals over 65 receiving typical forms of retirement income.
ParentsUnder the Camp proposal, the child tax credit grows to $1,500 and is indexed to inflation.
CharitiesThe reforms preserve deductions for charitable giving, and extend the tax year to April 15 for purposes of calculating donations.
ResearchersThe proposal makes the Research and Development tax credit permanent. (Unless you make violent video games.)
DriversCamp would bail out the Highway Trust Fund, which is approaching insolvency, with an infusion of $126.5 billion over a decade.
CorporationsThe corporate income tax would be slashed from 35 percent to 25 percent.
Current HomeownersThe plan preserves the mortgage interest deduction for all current homeowners, but phases it out for expensive homes purchased in the future.
Individual InvestorsCamp would treat investment income as regular income rather than capital gains, but would exempt the first 40%, representing a net gain for investors.
StudentsThe proposal consolidates the tax code’s confusing maze of education benefits down to five streamlined programs.
Medical Device ManufacturersThe tax on medical devices, which was created to help pay for the Affordable Care Act, would be eliminated.
The DisabledA new tax break would make it less expensive for businesses owners to make their places of work handicapped-accessible.
The TaxpayersThe AMT is eliminated permanently.

Top Reads From The Fiscal Times:

A longtime reporter on the intersection of the federal government and the private sector, Rob Garver is National Correspondent, based in Washington, D.C. He has written for ProPublica, The New York Times and other publications.