The only constant in life is change. That's also the case with taxes. Just ask anyone/everyone who's ever had to deal with new laws.
Now big change is coming to the House panel charged with originating all U.S. tax measures. Ways and Means Chairman Dave Camp (R-Mich.) announced Monday, March 31, that he will not seek reelection.
That, along with the 2015 Republican budget proposal, likely means that there won't be any major changes to the tax code any time soon.
Already planning to go: Camp already was set to relinquish his chairmanship of the tax-writing panel. But given his commitment to revamping the Internal Revenue Code, he no doubt would have continued to champion changes.
He already has a lot invested. In February, Camp released the first major effort to revise the tax system since the 1986 Tax Reform Act.
Some, primarily those who would see long-standing tax breaks disappear in return for lower rates and simpler laws, immediately dismissed the working paper as, well, unworkable.
Others lauded the effort that Camp and Ways and Means and Joint Committee on Taxation staff put into the proposals.
Now what will happen to them?
One, two, three tax reform strikes: It already was a given that nothing substantive would happen in an election year. But things have really been going south of late.
The tax rewrite effort lost some steam when Senate Finance Committee Max Baucus (D-Mont.) gave up his seat and become ambassador to China. The breaking up of the Max and Dave Tax Reform Road Show was not a good sign for substantive code change any time soon.
Then came Camp's decision to leave Capitol Hill.
And the apparent third strike was tossed today. Rep. Paul Ryan (R-Wisc.), current chair of the House Budget Committee and the likely new Ways and Means head, issued the Republican's 2015 budget.
The primarily political document — yes, it's still called The Path to Prosperity — echoes previous year's proposals. It would not raise any taxes, would repeal Obamacare and would make major changes to so-called entitlement programs, such as food stamps, Medicare and Social Security.
As for tax reform specifically, the budget proposal cites the need for fundamental changes but does not recognized Camp's effort alone.
"There are a number of good tax-reform proposals" out there, notes the budget document, but it "does not embrace any particular proposal." Rather, it generally seeks a tax code that is "simpler, fairer, and more competitive."
Here's how the Ryan document describes tax revision options:
Ways and Means Committee Chairman David Camp has proposed a comprehensive, revenue-neutral tax reform plan that would lower individual and corporate tax rates and remove a number of distortions in the code. The Joint Committee on Taxation has analyzed this plan and determined that it would increase real GDP by between 0.1 percent and 1.6 percent depending on the economic model used.
Congressman [Michael] Burgess [R-Texas] has also introduced a plan to dramatically simplify the tax code by offering individuals and businesses the option to pay a single flat tax on their income instead of navigating the maze of existing tax provisions. His plan would also repeal estate and gift taxes.
In addition, Congressman [Rob] Woodall [R-Georgia] has submitted a fundamental tax-reform plan for consideration by the Ways and Means Committee that would eliminate taxes on wages, corporations, self-employment, capital gains, and gift and death taxes in favor of a personal-consumption tax that would provide the economic certainty that American businesses, entrepreneurs, and taxpayers desire.
"Congress should consider these and the full myriad of pro-growth plans as it moves toward implementing the tax reform called for under this budget," say Ryan's plan.
Basically, it looks like the presumptive Ways and Means chair will go back to square one when he takes over in 2015.
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kurgen99
As a real estate professional, the tax reform effort has been alarming.
Camp’s proposals to eliminate 1031 exchanges, limit the mortgage interest deduction, eliminate the deduction of state and local taxes coupled with congressional proposals to eliminate Fannie and Freddie are alarming to anyone involved in the real estate industry, and should also be of major concern to everyone. Any combination of these proposals would crush domestic and foreign investment in the real estate market, destroying many middle and upper class jobs and causing property values to plummet. Falling real estate prices would result in a massive loss of equity, and would lead to more foreclosures, bankruptcies and another financial crisis.
mike craig
Don’t hold your breath waithing for real tax reform, especially when you consider the reform is coming from the folks that brought us the mess in the first place.
skbell1
Mike, now you have me hearing in my head that booming movie trailer voice over: “In a world where taxes are out of control, those responsible for the mess make it worse!”