Opinion

Dave Camp's tax plan tells us a lot about the post-Obama GOP

It's a glimpse of a governing vision centered around anti-privilege, pro-competition populism

Since Obama's election, the GOP has been tagged as a party of unremitting obstruction and opposition, with little to offer in terms of substance. But last week Rep. Dave Camp (R-Mich.) stepped out on the political stage and tapped out a major reform of the U.S. tax code.

Because an enormous overhaul of the American tax code creates uncertainty about winners and losers in a reform effort, the bill probably won't be allowed to pass; it is just too easy for Democrats to attack from status-quo bias. The Republicans think all they have to do to prosper in November is run against ObamaCare. And so the plan is being marketed as "Camp's" and not the Republican Tax Plan.

But Camp's tax reform is a flashing signal of what the post-Obama GOP might become. Together with Mike Lee's attempts at policy-rewriting, it seems that Republicans are giving little glimpses about how they might govern again.

In broad outlines, the plan lowers individual tax rates and collapses the code from seven different income brackets to two. More importantly, it lowers the corporate tax rate, which is very high relative to other developed nations. Any lowering of corporate tax rate should have a positive effect on domestic investment. Even without promising to raise revenue, the plan got the normally withering Jonathan Chait to sit up and declare, "It may be the most impressive and ambitious domestic policy proposal crafted by a major Republican in a generation."

But the most intriguing part of the Camp plan is the way it is more solicitous of the material interests of Republican voters, rather than those of the urban rich who actually constitute the Democrats' base of "values voters."

The Camp plan eliminates the federal deduction for state and local taxes. The liberal analysts at Talking Points Memo echoed the complaints of New York Sen. Chuck Schumer about this proposal in a story called: "GOP's new plan hikes taxes on Americans in blue states." But the more provocative and accurate way of titling it might be "GOP plans massive tax hike on the rich." Or those that TPM refers to as "middle-to-upper income people who live in New York and California." As Robertson Williams of the Tax Policy Center admitted, the current deduction that the Camp plan would eliminate is "particularly of value to high income taxpayers for whom deductions are worth more. They're more likely to itemize in the first place, and when they do itemize, the amount they itemize is larger." In other words, Washington has been effectively subsidizing the big-government visions of New York, Massachusetts, and California at the expense of low-tax states. The new reform would eliminate that.

Camp's plan also inspired a similar headline from the Wall Street Journal: "Camp's bank tax shows Wall Street still in doghouse." It's a reference to how Camp's plan would disincentive banks from growing too large, in order to counter the subsidy that currently accrues to banks considered "too big to fail." Banks aren't happy about an extra 3.5 percent quarterly tax on assets, but probably should be happy about the overall cuts to tax liability.

And it isn't just banks. Timothy Carney notes that lots of special interests get their tax-code goodies taken away.

Camp's reform would gore powerful industries by taking away their carve-outs. He would kill the tax credit for electric vehicles (sorry, Tesla), disallow deductions for lobbying (sorry, lobbyists), end special tax treatment for film and television production (sorry, Hollywood), phase out the tax credit for wind and solar generation of electricity (sorry, GE), and kill dozens of other targeted tax breaks. [Washington Examiner]

For too long the GOP has been defined as the party that simply and supinely "helps" business. But the kind of anti-privilege, pro-competition populism embodied by the Camp plan is a good first step toward a new governing vision for the GOP. All that's needed is larger child-tax credits and other measures that can help young people pursue the dream of forming families in stable households. Take those ideas from the Mike Lee tax plan, and the Republican Party will have a lot more to say to voters than "No."

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