US tax reform update: House Ways and Means chairman tax reform discussion draft and new building blocks for eventual US tax reform

The last two weeks have seen significant developments in building the blocks for what could eventually form the base of US tax reform. Most significant is the 979-page ‘Tax Reform Act of 2014’ discussion draft from House Ways and Means chairman Dave Camp (R-MI) — a sweeping, comprehensive reform package that would reduce US corporate and individual rates, reform US international tax rules and significantly alter the existing landscape of industry tax preferences. The Obama administration also released its tax proposals this week as part of the FY15 Budget.

Most Washington pundits have dismissed the Obama and Camp proposals as ‘dead on arrival’. With respect to the Camp proposal in particular, the truth is very much the opposite if one takes a longer-term perspective. It’s important for business to pay attention now to these proposals because: the tax revenue raisers are being proposed by a Republican; the Camp tax reform proposals are being presented as the ‘right answer’ on the policy merits, and so become the ‘correct policy’ baseline for ongoing tax reform and future efforts; although the Camp and Obama plans differ greatly in many aspects, there are also significant areas of overlap; once a revenue-raising proposal is out there, it remains available as a ‘pay for’ to fund unrelated tax proposals; and if the affected business sector does not vigorously respond to an adverse proposal, that quiescence can be taken as acquiescence by those on the Hill.

Thus, Camp’s bill remains ‘on the shelf’ and close at hand for as long as it takes for Congress to move tax reform…

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