As reported in today's Wall Street Journal, House Ways and Means Committee Chairman Dave Camp (R-Mich.) will be pursuing broad-based tax reform.  Unlike other efforts (particularly potential Senate efforts) in this area, Camp is committed to implementing all three legs of the tax reform stool:

  1. Lower the rates.  The Camp plan would cut the top personal and corporate rates to no higher than 25 percent.  In the case of the corporate income tax, that would move us from the highest rate in the developed world to only slightly higher than our European competitors.  The 25 percent personal income tax rate is needed to keep a consistent tax treatment of all business profits.
  2. Broaden the base.  The tax code should not favor one type of economic decision over another type of economic decision.  All consumed income should be taxed once, and at one low, flat rate.  Broadening the tax base is the way to get there.  Ideally, a flat rate should apply to a pure consumption base.  Camp wants to explore base broadening in concert with lower rates.
  3. Avoid a net tax hike.  This is the forgotten leg of the stool, but not by Camp.  He is committed to keeping federal tax revenues at their historical level of just over 18 percent of GDP.  Other plans call for federal tax revenue targets of 21 percent of GDP or higher.  Reforming the tax code should not become a wolf in sheep's clothing for a massive net tax hike.