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Keep tax reform alive

The Detroit News

We wish we were as confident as outgoing Rep. Dave Camp of Midland that the tax reform seeds he planted in Congress will grow into a full-fledged effort to make the tax code serve the dual purposes of fairness and economic growth.

But without the presence of the Republican chairman of the House Ways and Means committee, chances of his reforms gaining the bipartisan support they need for passage seem slim.

While nearly everyone in Washington, including President Barack Obama, pays lip service to the need to address taxation, the political will to do so remains weak.

Still, Camp told The Detroit News this week he thinks the issue will remain alive in the new Congress, and outgoing Michigan Sen. Carl Levin agreed.

So did Obama, saying at a press conference, "The tax area is one area where we can get things done."

Sounds good. But now listen to Michigan's other Democratic senator, Debbie Stabenow, who unlike Camp and Levin, will still be around when the new session begins in January. Asked for her views on tax reform, Stabenow said she's all for it, if "it's done in the right way" and focuses on "closing all those loopholes that are shipping jobs overseas."

Camp's reform blueprint does indeed close loopholes, but it's overarching mission is to reduce both the business and individual tax burden. He would keep jobs in the United States by making the corporate tax more competitive, while Obama and Stabenow are searching for ways to use the code to punish companies for seeking a more tax-friendly climate overseas.

Those are sharply different viewpoints. The president, in his remarks, remained fixated on how the government can force fairness, noting some companies are paying the full 35 percent corporate rate, while others are paying zero because "they've got better accountants and lawyers. That's not fair."

But Obama could put a lot of those high-priced accountants and lawyers out of business by getting behind Camp's plan, which would simplify the tax code and eliminate many deductions in exchange for lower marginal rates.

The beauty of his outline is its simplicity — he estimates it would sharply reduce the $186 billion Americans now spend on filing their forms.

Businesses, with lower true tax rates and fewer loopholes, would have less need for sophisticated tax strategies and less incentive to relocate to countries with more favorable rates than those currently imposed in the United States.

For individuals, Camp's plan would collapse the current six income brackets into three — 10, 25 and 35 percent — and repeal the onerous Alternative Minimum Tax.

For businesses, the proposal would reduce to 25 percent the current 35 percent rate — still much higher than the most competitive countries — and lower the amount of tax multi-national corporations pay on their overseas earnings.

Instead of punishing companies for repatriating their foreign earnings, it would encourage them to bring them home and invest them in new enterprises and jobs.

Camp's plan should have been the start of a much-needed debate when it was introduced in 2013. But it has pretty much sat on the shelf.

With Obama, Stabenow and others on the left still seeing the tax code as a confiscatory tool, rather than an instrument to encourage maximum economic growth, and with Camp no longer around, the prospects for his reforms becoming law are dim unless another influential champion steps up.