An article by Rep. Dave Camp (R-MI) titled “How to Fix Our Appalling Tax Code” appeared in the Wall Street Journal on Feb. 25. A heading notes: “Every year Americans spend more than six billion hours and $168 billion to file their returns.” That’s interesting, but that isn’t the main problem with the tax code. Camp also complains that the tax code is lengthy, but that isn’t a significant problem either–tax law could be good and long or short and bad. What else does Dave Camp think needs fixing?
… owners of small businesses face tax rates as high as 44.6%, while the total (state and federal) U.S. corporate rate, 39.1%, is the highest in the industrialized world.
A front-page article by Brian Tumulty, which appeared in the Elmira Star-Gazette today, cites Citizens for Tax Justice Director Bob McIntyre: “Between 2011 and 2012, the (Citizens for Tax Justice) study found, IBM paid a rate of 5.2 percent in the U.S while playing 29.3 percent overseas. McIntyre said that finding repudiates claims by business lobbyists that the U.S levies the highest corporate taxes in the world and needs to lower the statutory rate of 35% (as Dave Camp proposes).”
The tax code should make it easier for American companies to bring back profits earned overseas so they can be invested here.
This is another way of saying overseas profits should be untaxed. Many companies achieve this now one way or another. Camp would make this practice legal.
… the individual income tax needs to be simpler, fairer and flatter for everyone.
Oh oh, flatter isn’t fairer or better. That’s a gift to the wealthy.
First, the tax code will be made simpler—so every family can do its own taxes confidently, without fearing an audit, or wondering if someone else who can afford an expensive accountant is getting a better deal.
Simpler would be fine if it doesn’t come with a cost. Most people don’t need an accountant now; only those who seek to cheat need fear an audit.
Second, the tax code will be made more effective and efficient by getting rid of special-interest handouts, which will mean lower tax rates for individuals, families and all businesses. Under this plan, over 99% of tax filers will face a top tax rate of 25%—allowing small and large businesses alike to expand operations, hire new workers and increase benefits and take home pay. On the individual side, there will be an introductory bracket of 10%.
Camp would lower rates, yes, and close loopholes to make up for it. But would one’s tax due go up or down? Camp doesn’t say. Lower rates would be a done deal, but Congress, which created the loopholes, has a poor record at closing them.
What does this mean for you and your family? Because we will have a healthier economy, wages will rise. With more income but lower tax rates, families with a median income ($51,000 for a family of four) will have on average an extra $1,300 in their pocket at the end of the year.
Here is a whiff of supply-side, the false idea that lower tax rates result in increased revenue, along with the disturbing odor of trickle-down. Everyone will have more money in their pocket, but only if wages increase due to tax reform.
Third, make the tax code fairer and more accountable. That means no more hidden provisions that benefit a favored few, and no more tax increases to fuel more spending.
No more hidden provisions? Not unless human nature has changed. No more tax increases? Why or why not? Tax increases fuel spending? Who knew?
When politicians talk tax reform, taxpayers ought beware. If Dave Camp’s proposal is revenue neutral as he claims, everyone’s taxes can’t go down; someone’s must go up. Dave Camp, a Republican, is not one to raise taxes on businesses or wealthy persons–the taxes that go up most likely will be yours.
© William Hungerford – February 2014