Just two days after he proposed a
sweeping overhaul of the nation’s tax code, Representative Dave Camp,
Republican of Michigan and chairman of the House Ways and Means Committee, traveled
to Park City, Utah, for a fund-raiser attended by lobbyists from some of the
nation’s largest corporations, including MetLife, Koch Industries, Bank of
America, the Altria Group, Pfizer, HomeDepot, PricewaterhouseCoopers and
AT&T.
The event was intended to honor
Mr. Camp, but the gathering ended up serving a decidedly different purpose: the
unofficial kickoff of a push to make sure that Mr. Camp’s tax plan dies, a campaign
that is highly likely to succeed, particularly now that Mr. Camp announced this
week he will not seek re-election this year. This twist reflects not only a
pivot by lobbyists who had spent months cheering Mr. Camp’s three-year effort
to draft this giant package – since its stated purpose was to lower corporate
tax rates and simplify the tax code – but also how lobbying in Washington is
often about stopping action and preserving the status quo.
Conceptually, rewriting the tax
code has bipartisan support in Congress, and Mr. Camp’s proposal, released on
Feb. 26, represents the most substantial effort to remake the tax code since
1986, and the 979-page tax plan would cut the overall corporate tax rate by
creating a new bank tax and a surtax on the very wealthy, among many other
changes.
The plan would impose a tax
costing $86 billion over 10 years on nine large lending institutions — JPMorgan
Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley,
GE Capital, the American International Group and Prudential. Private equity and
hedge fund managers would face a big hit because income gleaned from their
clients’ investment gains would be taxed at income tax rates, not the much
lower capital gains rate. Insurance companies also would take a hit, as would
advertisers, since company advertising would no longer be considered a
tax-deductible business expense. The small-business lobby was also incensed
over a 35 percent tax rate on most income over $400,000 ($450,000 per couple)
since most small businesses pay taxes under the individual income tax system,
and the corporate tax rate tops out at 25 percent under the Camp plan.
Even though its chances of
passing are remote, what the corporations and lobbyists perhaps most fear now
is that some of the individual revenue-raisers in Mr. Camp’s plan could
actually be adopted independent of a larger bill.
Jeffrey H. Birnbaum, president of
BGR Public Relations and a former journalist who wrote, with Alan S. Murray,
“Showdown at Gucci Gulch,” the seminal book on the Tax Reform Act of 1986, has
helped assemble the Coalition for Fair Effective Tax Rates, uniting the
small-business lobby — the National Federation of Independent Business — with
the retail lobby, the Retail Industry Leaders Association.
“The history of tax reform is
that it takes a long time to gestate,” Mr. Birnbaum said. “We understand
there’s not likely to be legislation this year, but that gives us the
opportunity to educate lawmakers.”
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