Dave Camp's Tax Plan Isn't Really Revenue-Neutral

A blog about business and economics.
Feb. 28 2014 11:23 AM

Dave Camp's Tax Plan Isn't Really Revenue-Neutral

175158564-house-ways-and-means-committee-chairman-david-camp_1
Rep. Dave Camp.

Photo by Chip Somodevilla/Getty Images

As I wrote yesterday, there are some good, praiseworthy elements in the tax reform plan released by Rep. Dave Camp (R-Mich.) this week. Democrats obviously aren't going to vote for the plan because it doesn't raise any revenue, but Jonathan Chait thinks it's worthy of constructive engagement anyway since obviously no Republican was going to put a tax hike plan on the table.

But it's worth saying that Camp's plan doesn't just fail to raise revenue. It probably reduces government revenue. Because the Committee for a Responsible Federal Budget grades Republicans on a curve for the sake of maintaining its posture of nonpartisanship, their overall write-up of Camp's plan is full of praise, but the analysis wisely notes that the plan "relies on several one-time revenue sources and timing shifts to pay for permanent rate cuts, meaning that it could actually increase deficits in future decades."

Advertisement

One example is that Camp wants to switch our corporate income tax system to what's called a "territorial" system, a change that has some merits but would reduce long-term corporate income tax revenue. But part of the switch would be a one-off transitional period in which earnings that U.S. firms have currently stashed abroad to avoid taxes on would be brought home and lightly taxed. Within a 10-year budget window, you can raise substantial revenue with this kind of thing. But in the second and third decade those fees go away and the permanent costs remain in place.

A genuinely revenue-neutral tax reform is worth contemplating for the potential growth benefits. But a tax reform that's only revenue-neutral in this gimmicky sense while locking in a lower baseline is no good.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Congress’ Public Shaming of the Secret Service Was Political Grandstanding at Its Best

Michigan’s Tradition of Football “Toughness” Needs to Go—Starting With Coach Hoke

A Plentiful, Renewable Resource That America Keeps Overlooking

Animal manure.

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Politics

Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Hasbro Is Cracking Down on Scrabble Players Who Turn Its Official Word List Into Popular Apps

Florida State’s New President Is Underqualified and Mistrusted. He Just Might Save the University.

  News & Politics
Politics
Sept. 30 2014 9:33 PM Political Theater With a Purpose Darrell Issa’s public shaming of the head of the Secret Service was congressional grandstanding at its best.
  Business
Moneybox
Sept. 30 2014 7:02 PM At Long Last, eBay Sets PayPal Free
  Life
Gaming
Sept. 30 2014 7:35 PM Who Owns Scrabble’s Word List? Hasbro says the list of playable words belongs to the company. Players beg to differ.
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Sept. 30 2014 3:21 PM Meet Jordan Weissmann Five questions with Slate’s senior business and economics correspondent.
  Arts
Brow Beat
Sept. 30 2014 8:54 PM Bette Davis Talks Gender Roles in a Delightful, Animated Interview From 1963
  Technology
Future Tense
Sept. 30 2014 7:00 PM There’s Going to Be a Live-Action Tetris Movie for Some Reason
  Health & Science
Bad Astronomy
Oct. 1 2014 7:30 AM Say Hello to Our Quasi-Moon, 2014 OL339
  Sports
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.