Camp, a lawyer by training, is trying to close the biggest sale of his life. He wants Congress to embrace his 979-page tax-reform plan. The most thoughtful overhaul proposal since 1986, the Camp plan cuts rates for corporations and individuals by eliminating tax preferences that distort the economy. And it will allow middle-class filers to keep an extra $300 per year.
Camp’s envisions his proposal as the basis for bipartisan legislative action in 2015, when his Republican Party could control both the House and the Senate — and, as a consequence, legislate concrete plans to expand the economy, create jobs, and increase middle-class incomes.
The plan also is loaded with goodies for investors, including the lowest rate on dividends ever. “It’s lower than Reagan’s, lower than Bush’s, and certainly lower than Obama’s,” he told me during a phone call last week.
UNDER CAMP, THE FIRST 40% of dividends and capital gains would be excluded from taxes. The remaining 60% would be taxed as ordinary income, with a top rates of 10% for single filers earning up to $37,400 and joint filers up to $74,800. Higher-income earners would be taxed at a top rate of 25%.
Individuals with modified adjusted gross incomes above $400,000 — and $450,000 for joint filers — from sources other than manufacturing would be subject to a 10% surcharge on certain sources of that money. This would, in effect, create a higher tax bracket of around 35% in which interest from state and municipal bonds would be taxed. According to DLA Piper, an international law firm, capital gains and qualified dividend income would be taxed at a maximum rate of 24.8% for these wealthy individuals, taking into account the 3.8% tax on net investment income imposed by the Patient Protection and Affordable Care Act. Currently, the top effective rate is 25% when you throw in the Obamacare tax.