CRFB Launches Tax Reform Resource Page

Tomorrow, House Ways and Means Chairman Dave Camp (R-MI) is expected to release his comprehensive tax reform proposal after a series of discussion drafts. The tax code is in significant need of an overhaul, and reform can to improve fairness and simplicity, make U.S. businesses more competitive, and reduce the deficit. Over the years, CRFB has produced extensive analysis of previous proposals and the need for tax reform.

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To get a better idea of how Chairman Camp's proposal would compare to previous reform efforts, take a look at this chart summarizing several bipartisan tax reform plans from recent years.

Comparison of Bipartisan Tax Reform Plans

Area Simpson-Bowles Illustrative Plan Domenici-Rivlin 2005 Tax Panel Growth and Investment Plan Wyden-Coats
Individual Income Tax    
Tax Rates 12% | 22% | 28% 15% | 28% 15% | 25% | 30% 15% | 25% | 35%
Standard Deduction Increased 10% Replaced with work and family credits Replaced with work and family credits Roughly Tripled
Personal Exemptions Retained Retained
Child Tax Credit & EITC Retained Retained
AMT Repealed Repealed Repealed Repealed
Mortgage Interest Deduction Converted to 12% credit; capped at $500K mortgage Converted to 15% credit; limited to $25K of interest Converted to 15% credit; limited to average price of housing No change
Charitable Deduction Converted to 12% credit; 2% of AGI floor Converted to 15% credit Retained with 1% of income floor No change
Employer Sponsored Insurance Exclusion Capped, phased out from 2018 to 2038 Capped, phased out from 2015 to 2025 Capped at average premium Cafeteria Plans Preference Eliminated
State & Local Tax Deduction Eliminated Eliminated Eliminated No change
Misc. Itemized Deductions Eliminated Floor increased to 5% of AGI Unspecified Eliminated
Muni Bond Exclusion Phased out for new bonds Private Activity bonds repealed Retained Replaced with a credit
Retirement Savings Consolidated and capped at $20K or 20% of AGI Consolidated, replaced with 15% credit up to $20K or 20% of AGI Replaced with “Save for Retirement” accounts with $10K limit Consolidated into new Retirement Savings Accounts and Lifetime Savings Accounts
Capital Gains and Dividends Taxed as ordinary income (top rate 28%) Taxed as ordinary income (top rate 28%) Taxed at 15% top rate Taxed as ordinary income with 35% exclusion (top rate 22.75%)
Step-up Basis for Capital Gains Eliminated Eliminated Retained No change
Other Tax Expenditures Most other tax expenditures eliminated Most other tax expenditures eliminated Most other tax expenditures modified or repealed Several dozen tax expenditures eliminated, including various exclusions for employee benefit
Corporate Income Tax    
Rates 28% 28% 30% (consumption base) 24%
Depreciation Economic depreciation No change Full expensing Alternative Depreciation Schedule
Domestic Production Deduction Eliminated Eliminated Unspecified Eliminated
Inventory Accounting LIFO eliminated No change All purchases immediately deductible LIFO and LCM eliminated
Other Tax Expenditures Eliminated Mostly eliminated Mostly eliminated Mostly eliminated
Interest Deduction No change No change Disallowed; interest income is not taxed Deduction in excess of inflation disallowed
International Tax Territorial No change Destination-based Worldwide

 Visit Our Tax Resource Page for More Information

Check back tomorrow and later this week for more analysis of Camp's tax reform draft.