What To Like (and Dislike) in the Camp Tax Proposal

Rana Foroohar

There are things to like and things not to like about Republican congressman Dave Camp’s new 979-page tax plan. But here’s what I like most about it – it starts a serious conversation about tax reform that we definitively need to have, and provides a host of ideas that deserve serious discussion. First, the points that I’m in favor of: A cut in the mortgage interest deduction from $1 million to $500,000. It will make a lot of upper middle class people angry (and it will hurt people who, like me, live in big expensive cities that require enormous mortgages to procure enough space for our families). But that’s ok — it’s still the right thing to do. As Nobel laureate Robert Shiller and other housing experts have explained, incentivizing people to pour the majority of their income into giant mortgages, which discourages investment diversification and encourages debt, isn’t a great use of our country’s savings. Ideally, the mortgage deduction would be structured in such a way as to take into account the nuances of various city real estate markets. But it’s tough to argue that we should be encouraging people to take out $1 million mortgages across the board. An across the board cut in the corporate tax rate from 35 to 25 % — but only if many loopholes are closed, too. It’s true that U.S. taxes are high on an international basis – and you can make an argument that if they were lower, it would encourage more investment here at home. But it’s an argument that only holds if the companies end up paying the 25 % (currently, many corporates pay under 20 % even though the official rate is 35 %, thanks to the many corporate loopholes created by industry lobbying). I very much like the idea of not subsidizing rich industries like oil and gas or finance with special tax cuts – we should also make it a lot tougher for all industries to keep money offshore in overseas bank accounts. Raising more money



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