Originally published on Forbes.com Feb 27th, 2014
Dave Camp, chairman of the House Ways and Means Committee, has released a comprehensive tax reform proposal and the comments are flying in. I will try to give you as good a summary of them as possible, but I believe that I can give you the essence of most of them. You can use this as a template to make your own comments if you want:
Comprehensive tax reform and simplification is a fantastic idea. We here at the ABC Coalition for DEF just love the idea that you are working on it and totally support you. Of course we are sure that you know the DEF is critical to the American way of life and the health, safety and well-being of the world. We would just like to remind you that the GHI deduction and the JKL credit play a critical role in supporting DEF. So when you are doing your simplifying don’t even think about messing with the GHI deduction and the JKL credit. As a matter of fact, you probably should beef them up a bit and get busy on the MNO exemption that we have been asking for. Other than that, chop away at those special tax breaks and give us a simpler Code.
You can go through the Joint Committee on Taxation’s Explanation to get all the details, (or check out Tony Nitti)but the essence of the proposal- lower rates and simplicity in exchange for a broader base make the comments predictable. Lower rates are a great thing except for the people you think should be paying more. The broader base isn’t so bad as long as the deductions and credits you like are still there. Those particular things don’t make the Code that much more complicated. With no further ado, her are some of the comments
CTJ does not even bother with the rah, rah we love tax reform. CTJ simply does not think that the corporate rate needs to be reduced.
While it’s true that even a pro-business politician like Dave Camp acknowledges that we must end some of the special breaks and loopholes that allow this rampant tax avoidance, he unfortunately proposes to give all the revenue saved right back to corporations by reducing the official corporate tax rate from 35 percent to 25 percent. This is why he describes his approach as “revenue-neutral
Stephen De Maura, president of AJS, comes close to an unqualified endorsement of the Camp proposal, although you should note the portion I highlighted.
From a job creation and economic growth perspective, Chairman Camp’s proposal is an appropriate first step to reform America’s tax code. In the current system, taxes are too high, too complicated and stifle the innovation and growth of businesses working to create jobs and grow the economy. Chairman Camp’s plan would reduce the corporate tax rate to an internationally competitive level and simplify the code.
History is not on the side of this being a first step. The last time we had comprehensive tax reform – 1986 – it was only a couple of years before it started getting complicated again.
Congressman Lloyd Doggett
I salute the extensive work reflected in Chairman Camp’s draft, which deserves our careful consideration. It contains some improvements, but we should work together to do better for both individual and small business taxpayers
Association of National Advertisers
….provision, which would be phased-in for tax years beginning before 2018, would allow advertisers to deduct only 50 percent of all advertising expenses in the first year and amortize the remaining 50 percent over the next 10 years.
Chairman Camp’s draft proposal would severely weaken the deduction for advertising expenses and have very serious consequences for businesses that use advertising as a means to drive sales and to inform consumers. It would have a profound impact on the economy as a whole. Chairman Camp’s proposal is a major new tax liability for businesses that would increase the cost of advertising and cause a substantial disincentive for companies to spend additional advertising dollars.
National Venture Capital Association
Venture capital investment is the rocket fuel that propels our nation’s economy. Ensuring that federal tax policy doesn’t hinder this important capital raising vehicle is essential to robust economic growth and American job creation,” added Franklin. “While we appreciate the substantive work that has gone into this reform proposal and applaud Chairman Camp for taking the initiative to tackle this important issue, the taxation of capital, particularly venture capital, is extremely complicated and needs to be approached in a prudent way. We are concerned certain aspects of the proposal, when combined, could negatively impact the startup ecosystem. NVCA and the venture capital community look forward to working with Chairman Camp and his colleagues on the Ways and Means Committee to address these concerns.
That “certain aspects” I highlighted is amusing. Do venture capitalists think that “carried interest” has become unmentionable?
Bond Dealers of America
BDA is concerned, however, about how a 10% surtax on tax-exempt bond interest income and outright elimination of private activity bonds will affect the ability of state and local governments to finance critical public infrastructure projects that we all use like highways, hospitals, and water treatment facilities. Borrowing costs for state and local governments will rise, translating to higher taxes and infrastructure cuts at the local level.
These guys break the mold and seem to offer an unqualified endorsement.
Chairman Camp’s proposal represents one of the most meaningful advancements for tax reform in nearly 30 years. Lawmakers from both parties have expressed support to simplify the code and reduce America’s world-leading corporate tax rate to an internationally competitive level. It’s time to harness this momentum and enact meaningful tax reform.
New Markets Tax Credit Coalition
The draft does not include incentives for private sector investment in business and community development projects in low income communities,” said Bob Rapoza, spokesperson for the NMTC Coalition. “The New Markets Tax Credit, which expired December 31st, has served as an engine for private investment in communities left outside of the economic mainstream, but its extension was not included in the draft.
American Petroleum Institute
Chairman Camp’s ideas show he has put a lot of work into tax reform, but there is a great deal of work left to do. Tax reform is not easy to achieve. As this proposal illustrates, it is even harder to get right.
An energy and manufacturing renaissance has supported our economy through tough times and created hundreds of thousands of jobs here at home. There are serious flaws in this discussion draft regarding cost recovery and LIFO accounting that could hurt jobs, American energy production and our energy security.
National Federation of Independent Business
While we appreciate Chairman Camp pursuing tax reform that lowers some rates, we are very concerned that this plan does not address the core issues that are important to all small businesses: simplifying the code, leveling the playing field for all businesses, and addressing both corporate and individual tax rates. We look forward to working with members of the Ways & Means Committee and Chairman Camp to achieve comprehensive tax reform that does not pick winners and losers based on size and type of business.
The ERISA Industry Committee
We understand that retirement tax incentives are a tempting target based on the congressional budget score-keeping methods, but these incentives are not what we would consider ‘closing tax loopholes.’ Elective deferrals to traditional retirement accounts are still subject to taxation and should not be confused with exemptions and exclusions. We believe the current elective deferral limit works well and should be maintained, as workers need flexibility to be able to save more when they are able and less when under financial constraints. The proposal could adversely affect this flexibility.
Advanced Energy Economy
Chairman Camp’s proposal is an important, if provocative, contribution to the tax reform discussion,” said Malcolm Woolf, senior vice president for policy and government affairs at Advanced Energy Economy, a national business association. “Unfortunately, zeroing out advanced energy tax credits would impede our progress towards building a high performing energy system that is essential to America’s long term economic prosperity.
Senator Patty Murray
While I applaud Chairman Camp for releasing this tax reform plan today, I am disappointed to see that, once again, House Republicans refuse to ask the wealthiest Americans and biggest corporations to contribute to reducing the deficit or investing in jobs and economic growth. It would be deeply unfair and fiscally irresponsible to place the entire burden of future deficit reduction on seniors, middle class families, and the most vulnerable Americans, which is exactly where this Republican plan would lead. I also am very concerned that this proposal would actually increase deficits beyond the ten-year budget window—an outcome we simply cannot afford given our long-term fiscal challenges.
Will There Be More?
I think a couple of the proposals may pique the interest of the “brain trust” that I have been cultivating in my nearly four years of tax blogging. I’ve reached out to them and may be getting back to you with some exclusive comments.
You can follow me on twitter @peterreillycpa.
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