House Ways and Means Chairman David Camp told Bloomberg TV's "Street Smarts" Thursday that his plan to overhaul the tax code is "moving forward," and that despite the fact that his draft legislation has stirred up a hornets' nest in Washington, "we're doing all the work in order to make that happen."
Said Camp, R-Mich., to Bloomberg TV's Chief Washington correspondent Peter Cook: "We have a lot of Republicans and Democrats supporting the fact that we're moving forward on this" draft legislation.
After being called a "brave man" by Cook to put such a tax overhaul plan out in a midterm election year, Camp responded: "It's February. We're supposed to do nothing until the election?"
Retirement planning groups, however, says Camp's plan is a nightmare for retirement savers. Chris DeGrassi, executive director of the National Tax-deferred Savings Association (NTSA), said after the discussion draft was released that while Camp hails the bill as a "comprehensive simplification of the tax code," the bill actually attacks workers of modest means.
The legislation, DeGrassi said, "seeks $200 billion in new taxes on retirement savings to pay for favors to Wall Street, such as excluding the first 40% of investment income from the capital gains tax. To accomplish this goal, the chairman effectively eliminates the main distinctions between private workplace retirement plans, such as 401(k) plans, and public and nonprofit workplace plans, such as 403(b) and 457 plans, in the name of tax code simplification and increased short-term revenue."
These distinctions, he says, "were designed to protect traditionally lower paid workers who feel called to serve society."
Here's an edited transcript of Camp's discussion with Bloomberg's Cook:
PETER COOK: You had to know putting this plan out in a midterm election year you'd get fire from all sides. You're getting it. Why'd you do this? Is this a kamikaze mission?
REP. DAVID CAMP, R-MICH.: No. Look, our economy isn't growing. I'm not going to accept 2% growth as the new normal. I'm not going to accept a minimum-wage economy, and I'm not going to accept the fact that we're not creating jobs. Kids are living at home because they can't get out on their own. So we need to grow this economy. We need to create jobs. One way to do that is through pro-growth tax reform. Also, we need to be the party of ideas. We need to move issues forward. And this is a big one that could help — help people, help jobs and really make America a much better place.
COOK: The big picture here for this plan, you've reduced the number of tax brackets from three, two, depending how you to look at, from seven. You also reduce the top rate both for the corporate side and for the individual side, yet you do away with a lot of these tax breaks or at least limit them, ones on the books right now. You've got industry folks, you've got Republicans and some Democrats taking aim at you over some of those changes. Are you ready for that? CAMP: Look, we have a lot of Republicans and Democrats supporting the fact that we're moving forward on this. The top rate in the '80s in America for business was the lowest in the world. Now we have the highest corporate tax rate in the world. So we go from 35 [percent] to 25. And you're right. Ninety-nine percent of taxpayers will be at 25 percent or less. I considered 99 percent an A when I was in school. So look, we're moving forward. And to do that, what we do is there are tradeoffs. We reform our tax code, do away with a lot of complexity.
We get rid of 228 provisions, reduce the code by 25%. Ninety-five percent of Americans will not be itemizing. That's many small-business owners as well. And so because we simplify and because we lower rates, we actually grow the economy by 20%. And if we can get 20% growth in the economy, that also translates into almost 2 million jobs. And look, jobs and the economy, that's the number-one issue facing Americans. And Americans want us to do something about it. So this draft proposal is one way to do something about it, and it's pro-growth reform.
COOK: And it's also a sure way to get tax lobbyists in this town running all over the city trying to undermine your efforts. You've got individual industries here taking aim. Let me talk about one specific in your plan. This tax on the largest financial institutions in the country. Sounds an awful lot like what the president proposed after the financial crisis, the financial crisis tax. Tell me the justification for targeting an individual industry like this.
CAMP: I think it affects about six banks…
COOK: Four or five insurance companies as well.
CAMP: But look, they are going from a 35% rate to a 25% rate. And the financial sector there aren't a lot of provisions, loopholes, et cetera, to close because there aren't many. So they're getting a tremendous tax break, and I think it's important there be a tradeoff. In order to pay for and have revenue-neutral tax reform, if you're going to lower rates by that much — and frankly many and most financial institutions are going to do better under this plan than they do now. And you know why they're going to do better? Because the economy's going to grow. The nonpartisan Joint Committee on Taxation says we're going to get growth. And if we get growth, everybody does better. As President Kennedy said, a rising tide lifts all boats.
