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.
Click Here to Visit Our Tax Resource Page
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| AMT | Repealed | Repealed | Repealed | Repealed |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| Muni Bond Exclusion | Phased out for new bonds | Private Activity bonds repealed | Retained | Replaced with a credit |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.
