Philip Klein has mixed feelings about the Michigan Republican’s proposal:
Overall, though the bill would represent progress, too much of it still accepts the premise that the federal tax code should be used by the government to promote certain national priorities rather than merely being a neutral way to raise revenue. There are other provisions that I’d take issue with, such as the one targeting investment firm managers (see this Avik Roy post for a good explanation of the issue).
Additionally, I would have liked to have seen Camp tackle payroll taxes, because for most Americans, this is the heavier burden than income taxes. They are also an incredibly economically destructive tax, because not only do they reduce spending power, but they make it more expensive for employers to hire new workers.
I’m sympathetic to that. I’d love a tax code whose sole purpose is the most efficient, simple and least market-distorting mechanism by which to raise revenues. But I’ve learned not to prefer the perfect to the good. In terms of economic impact, Chait says the proposal is the best he’s seen from Republicans:
The evidence suggests that cutting tax rates, financed by deficits, does little or nothing to spur economic growth. But Camp’s plan doesn’t do that. It instead reduces tax rates by eliminating preferences in the tax code. Subsidies for home mortgage debt and employer-sponsored insurance, among others, would be radically scaled back. And eliminating these kinds of favoritism encourages workers and businesses to instead follow market signals, and likely to make more market-friendly decisions.
It would surely be better if Camp agreed to draw up a plan that increased revenue, but let’s get real about this. Republicans were never going to agree to higher tax revenue for nothing.
Drum takes a second look and is more impressed:
I was wrong. It turns out that Camp’s plan specifies the tax breaks he wants to close in considerable detail. And according to the analysis of the Joint Committee on Taxation, which is usually fairly reliable, it would be both revenue neutral and distributionally pretty neutral too. Over ten years it would raise about $3 billion more than present law[.]
But Jared Bernstein insists that the plan is “fundamentally flawed”:
First, it claims to be revenue neutral, but achieves that goal only with timing gimmicks that ensure that its revenue neutrality will not last. Second, revenue neutrality is itself a recipe for an unsustainable budget path. Our demographics alone, not to mention growing challenges like climate change, imply future demands on government programs that clearly show neutrality to be a misguided guidepost for tax reform.
Yes, but you can still raise revenues after tax reform, can’t you? Chye-Ching Huang also warns that the plan will lead to lower revenues in the long run:
The plan’s scaling back of certain tax breaks raises more revenue up front than over time. For example, the plan ends “accelerated depreciation,” which allows businesses to deduct the cost of new investments at an accelerated rate. The JCT estimates show that the revenue gains from ending accelerated depreciation peak in 2019 and then dwindle. Treasury economists have found that ending accelerated depreciation saves much less revenue in the second decade than in the first, and less in the third decade than in the second.
Mark Calabria worries that the proposed bank tax would further enmesh the government with the finance sector:
While standard Pigouvian welfare analysis would recommend a tax to internalize any negatives externalities, [Too Big To Fail] is not like pollution, it isn’t something large banks create. It is something the government creates by coming to their rescue. I don’t see TBTF as a switch, but rather a dial between 100 percent chance of a rescue and zero. By turning the banks into a revenue stream for the federal government, we would likely move that dial closer to 100 percent–and that is in the wrong direction. For the same reason, I have opposed efforts to tax Fannie Mae and Freddie Mac in the past. The solution is not to bind large financial institutions and the government closer together, as a bank tax would, but to further separate government and the financial sector.
Politically, Stan Collender explains why the plan is probably going nowhere:
The plan includes tax increases on key Republican constituencies. No matter how rational that might be from a numerical point of view, that’s not something Camp’s colleagues will be able even to tacitly approve let alone actually vote for before either the next congressional election this November or the next presidential election in 2016.
In fact, Camp’s heir-apparent at ways and means — House Budget Committee Chairman Paul Ryan (R-WI) – and Speaker John Boehner (R-OH), the two most important people on tax reform other than Camp himself, both made it clear today before the Camp plan was formally revealed that they (and, by extension, House Republicans) are not close to being ready to deal with tax increases any time soon. Given that Ryan will likely take over from Camp next year, the very clear message he sent this morning was that the prospects for a tax increase will be different when he’s chairman.
procrastinating on. But the problem isn’t that Cantor and Boehner and Ryan would rather lay around on the sofa drinking beer and playing video games than write their health-care plan already. It’s that there’s no plan out there that is both ideologically acceptable to conservatives and politically defensible.
Theodor Herzl, Chaim Weizmann and the British Zionists who helped draft the Balfour Declaration did not aspire to create an empire like that of the British or French, but to be junior partners of the Western imperialist powers. Herzl, who admired CecilRhodes, described the Jewish state as “a part of a wall of defense for Europe in Asia, an outpost of civilization against barbarism.” The Zionist movement established “colonies” and aspired to create a Jewish state in a territory where, at the beginning of the Zionist movement, Arabs made up 95 percent of the population. American Zionists compared the Zionists in Palestine with American colonial settlers. At the time, colonialism and imperialism were not dirty words they way they are now. So yes, I think much of the Zionist movement—with the exception of Ahad Ha’am and his followers—saw themselves engaged in a mission that could be described as settler colonialism.
The Dish 