Politics & Policy

Congress's Dave Camp Is Out to Reform the Tax Code


Camp has one of the most coveted jobs on Capitol Hill

Photograph by Melissa Golden for Bloomberg Businessweek

Camp has one of the most coveted jobs on Capitol Hill

Republican Representative Dave Camp, chairman of what’s usually called the “powerful” House Ways and Means Committee, has a quiet voice. He’s tall and thin and leans in a bit when he speaks, as if to make sure you hear him when he says, “We are going to do a bill this year.”

He means a major bill to rewrite the country’s byzantine tax laws, something that’s eluded Congress since the last overhaul in 1986 and has become Camp’s singular focus. Elected to his first term in the same year as House Speaker John Boehner, Camp has represented central Michigan in the House for 22 years. As head of Ways and Means, with its authority over tax laws, he holds one of the most coveted positions in the Capitol—but you can be excused for never having heard of him. Camp spends weekends in his home state, not on the Sunday shows. He doesn’t offer up provocative sound bites for cable news, either. Instead, he’s been meeting one-on-one with colleagues—including every freshman Republican in the House—trying to persuade them there’s a way for Washington to break out of the cycle of standoffs over taxes and spending. He believes they can come up with a deal that’s short of a grand bargain but still ambitious.

Tax reform always sounds like a good idea. The Bush administration considered a rewrite of the laws in 2001, but opted to lower rates instead. Camp wants to cut the corporate and personal tax rates to 25 percent. In his budget released on April 10, President Obama called for a corporate rewrite that’s similar to Camp’s approach. Yet they part ways when it comes to individuals, predictably divided over whether tax reform should lower rates or increase revenue. To cut rates as deeply as Republicans would like, they’d need to find $5.7 trillion in offsetting tax increases over the next decade. That means Camp would have to consider reducing or eliminating middle-class breaks for mortgage interest and charitable gifts. To simplify the system, he’d have to anger many an industry by doing away with their coveted breaks.

The process will be tedious, which is why it’s well-suited to a low-profile journeyman like Camp. He’s fond of saying the U.S. tax code is as long as the Bible with none of the good news. After taking over Ways and Means in 2011, Camp resisted pressure within his party to do a small deal that would have helped companies bring overseas profits home. He didn’t want to give away leverage he’d need for a more ambitious rewrite with the lower rates. “His approach initially was to set a goal without any indication of how to get there,” says Michigan Representative Sander Levin, Camp’s Democratic counterpart on Ways and Means. The two men don’t agree much but show a grudging respect for one another.

To get a bill passed, leaders can create it from the top down—over sandwiches with the president or through a “blue ribbon” commission or supercommittee. (Camp sat on both the Simpson-Bowles debt reduction committee in 2010 and the failed supercommittee in 2011.) Or a chairman can take matters into his own hands and push a bill through his committee, gaining support from rank-and-file members and the public, making it awkward for leadership and the White House to ignore. Camp has opted for the latter. Instead of waiting for Boehner to negotiate a deal with the White House that would leave Camp to carry out instructions from above, he’s starting a process much like the one kids learn about in grade school. “This is not writing the bill in a leadership office and rolling it out on the floor,” says Camp. “This is about building a bill, piece by piece, from the ground up.”

In February, Camp and Levin agreed to divide Ways and Means into 11 working groups, each led by a Democrat and a Republican and each assigned to study one piece of the current code. Camp has also released draft proposals for reforming narrow areas of the tax laws. Under his plan for overseas income, U.S. companies would get a 95 percent break on their foreign profits in exchange for limitations on their ability to shift the money to tax havens. His proposal on derivatives would require investors to pay yearly taxes based on changes in value, even if they hadn’t sold, which would make it harder for the wealthy to collect income through lightly taxed capital gains. Camp also suggested tightening some of the provisions that lower the tax bills of businesses organized as partnerships instead of corporations.

Such changes would be the biggest in decades. Camp’s drafts so far represent a small portion of the law and aren’t fully spelled out. “The important and tough choices remain very much unaddressed,” says Levin. Camp says he’s getting there: The committee has held a hearing on charitable deductions, and he’s planning another on mortgage interest.

Texas Republican Representative Kevin Brady, who sits on Ways and Means, says over the past two years Camp has proved he can negotiate with Democrats. “There’s not a day that goes by that he doesn’t wake up asking, ‘How can I move fundamental tax reform forward,’ and then acting on it,” says Brady. That includes meeting weekly with his Senate counterpart, Max Baucus, the Democratic chairman of the Senate Finance Committee. “I see this relationship to be very strong,” says Baucus. “Now, we may in the end reach an impasse. It’s possible there’s a disagreement. But the mutual respect is solid.”

A little mutual respect can go a long way. In 1996, President Clinton twice vetoed Republican bills to reform the country’s welfare programs. On the third try, a Republican who’d helped to write the bill persuaded Newt Gingrich to drop cuts to Medicaid, and Clinton signed the bill. The congressman was Dave Camp.

The bottom line: Camp is trying to strike a tax deal to lower rates and close loopholes—something the president and party leaders haven’t managed to do.

Rubin is a reporter for Bloomberg News in Washington.
Greeley-brendan-190
Greeley is a staff writer for Bloomberg Businessweek in New York.

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