Tax Analysts, the nonprofit provider of federal, state, and international tax news and analysis, has published comprehensive coverage highlighting the new tax reform discussion draft released by House Ways and Means Committee Chair DaveCamp.
Tax Analysts Chief Economist Martin A. Sullivan argues that the tax reform discussion draft reinforces the low likelihood of major reform happening anytimesoon:
“The lack of follow-through is no surprise. Republicans are flying high on the failings of Obamacare, and they do not want any distractions, especially in an election year. But the current political landscape is not the main factor for inaction. Reforming the tax code is not something Congress actually wants to do. The tax community has known this for a long time. Now the general public is finding out. Republicans who had so loudly touted tax reform and oversold its benefits will be asked to explain why they aren’t pushing it forward. They will blame uncooperative Democrats who insist that tax reform raiserevenue.”
Tax Analysts Deputy Publisher David Brunori believes state and local governments would take a hit under theplan:
“I suspect that state and local governments will not be terribly pleased with Camp’s attempt at good tax policy. Most importantly, the proposal would end the federal personal deduction for all state and local taxes. Right now, those who itemize can deduct the state and local income and property taxes they pay. The effect of this deduction is that the costs of state and local government taxes are subsidized by the nation. Itemizers get some of their money back from the federal government, and the costs of state and local government don’t seem nearly as expensive to them. That’s a good thing for subnational governments, since they can tax and spend more with the knowledge that at least their wealthier citizens won’t have to pay the sticker price. My colleague Marty Sullivan has done work in this area and has found that the bulk of the deductions go to taxpayers earning morethan $100,000.”
According to Tax Analysts reporters, the plan would transform U.S. international tax rules by replacing the current system with a 95 percent dividend exemption for foreign businessincome.
Tax Analysts is a nonprofit, nonpartisan publisher of tax news and analyses. In addition to providing comprehensive and in-depth tax information, Tax Analysts works to defend the public’s interest by advocating for greater transparency in tax policy and rules, fostering increased dialogue between tax authorities and taxpayers, and providing forums for education anddebate.
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