Chairman Camp’s Tax Reform Discussion Draft: What Does It Mean to Insurance Industry?
In Feb. 26, 2014, House Ways and Means Committee Chairman Dave Camp (R-MI) released a comprehensive tax reform discussion draft (“Discussion Draft”) as part of his ongoing tax reform effort. The legislative language that constitutes the Discussion Draft totals 979 pages and builds on the Committee’s prior work on tax reform. The Discussion Draft incorporates proposals included in prior discussion drafts released by Camp focused on international tax reform (released Oct. 26, 2011), financial products tax reform (released Jan. 24, 2013), and small business tax reform (released March 12, 2013). The package of proposals included in the Discussion Draft is intended to lower tax rates, simplify the tax code, and strengthen the economy.
Several documents related to the Discussion Draft were also released, including a Ways and Means Committee section-by-section summary and a Joint Committee on Taxation (JCT) technical explanation that is divided into eight parts (one for each title of the Discussion Draft). In addition, two JCT revenue estimates were released—one estimate was prepared using the JCT’s traditional estimating procedures and the second considered the macroeconomic effects of the proposal (popularly referred to as “dynamic scoring”). The traditional revenue estimate shows the Discussion Draft would increase revenue by approximately $3 billion over the 10-year budget window. The dynamically scored estimate shows the Discussion Draft would increase revenue by $50 billion to $700 billion over the 10-year budget window depending on the modeling assumptions used, increase gross domestic product (GDP) by up to $3.4 trillion (which is equal to about 20 percent of current GDP), and create up to 1.8 million new jobs. Finally, a distributional analysis prepared by the JCT was released. The JCT revenue estimates and distributional analysis support Camp’s goal that the proposals would provide revenue and distributional neutrality. But, the revenue neutrality is not achieved on an industry-by-industry basis and relies on what could be considered onerous phase-in and transition rules, as well as on revenue estimates that are limited to 10 years.
Taxing Times Supplement (October 2014)