Amid all the partisan squabbling in Washington, D.C., that makes national news headlines is a bipartisan effort by the House and Senate chairs of the tax-writing committees to roll out major tax-reform legislation this summer and have it considered by Congress before the end of the year.
Warren Payne, policy director on the tax-writing House Ways & Means Committee, met with the National Association of REALTORS®’ Taxation Committee Wednesday morning at the 2013 Midyear Legislative Meetings and Trade Expo. He told attendees that Rep. Dave Camp (R-Mich.), the committee chair, and his counterpart in the Senate, Max Baucus (D-Mont.), have been meeting weekly and are determined to make a good-faith effort to rewrite the country’s tax laws before the end of the year. Rep. Camp will be stepping down as Ways & Means chair at the end of this session, and Sen. Baucus has announced his retirement at the end of his term.
“They’re starting with a blank page,” said Payne.
The two lawmakers’ goal is to be transparent and open throughout the process by keeping stakeholders — including REALTORS®—informed at every step along the way.
Already some 20 hearings have been held in the House, and a Web site called taxreform.gov has been launched to help explain the effort and get input from people inside and outside the formal policymaking process. At the NAR meeting, Payne encouraged REALTORS® to go to the Web site and submit their views and to tell others to do so as well.
The determined effort to craft a bill from scratch means the mortgage-interest deduction and other vital homeownership and commercial real estate incentives are on the table, although Payne noted that Rep. Camp has said he doesn’t consider MID “a loophole,” but rather a fundamental part of the Tax Code.
To start the overhaul, Rep. Camp is working with four goals in mind:
1. The individual tax rate should be split into two levels: 10 percent and 25 percent
2. The corporate rate should be set at 25 percent
3. The U.S. tax system should put the country in a competitive posture compared to other nations
4. The alternative minimum tax should be repealed
Camp also is working on the assumption that the tax overhaul will be “tax revenue neutral” over 10 years, which means it will be targeted to bring in $42.2 trillion over that period, no more, no less.
Payne said the 1986 tax overhaul is being looked at as a model for both what to do and what not to do. On the positive side, the 1986 effort shows how lawmakers can craft complicated tax legislation by finding areas of consensus, while on the negative side it shows what happens when lawmakers aren’t open and transparent throughout the process. He was referring to the changes to passive losses that many experts have said shattered the commercial real estate market.
Those passive-loss changes weren’t thoroughly vetted by the industry and other experts before they were approved. The result, many say, was massive, unexpected dislocation in commercial real estate that is still being felt today.
To avoid another debacle like that, Rep. Camp is keeping an open line of communication with all stakeholders, and in fact he and his staff are in regular communication with NAR and other groups to get input and minimize surprises. “We value our open communication with you,” Payne told the REALTORS®. “We want to have your input at every point along the way.”
–Robert Freedman, REALTOR® Magazine