Legislative Updates: April 2014
We assume Ways and Means Chairman Dave Camp (R-Michigan) was aware that the new version of his draft comprehensive tax reform proposal, released in late February, would be a difficult undertaking. Tax reform is popular in theory, but gets a lot more difficult in practice when actual changes to the tax code are discussed, especially when the ultimate goal is to reduce individual and corporate rates to 25%. But Chairman Camp persevered, working hard with his staff to produce a 900-page comprehensive tax reform discussion draft.
While the Chairman’s goal when crafting his tax reform proposal may have been to simplify and flatten the tax code and make it easier for everyone, corporations and individuals alike, to pay their taxes, it is ironic that the proposal makes the tax treatment of exchange-traded options transactions significantly more complicated than their treatment under current tax law and would effectively deprive retail and other investors of common strategies they use to reduce risk and generate income.
In this respect, Chairman Camp’s most recent version of his draft uniform taxation of derivatives proposal – contained within his comprehensive tax reform discussion draft – did very little to address the Coalition’s concerns with his original version of the draft proposal. Accordingly, the Coalition sent a letter to him on April 2, 2014 that expressed in detail our continued concerns about the inclusion of listed options in the draft proposal.
While tax reform faces long odds in 2014, the Coalition remains concerned that Chairman Camp’s draft proposal could potentially be used as a “pay-for” down the road, with Members of both parties using the revenue generated under his draft proposal to pay for other legislative priorities. To address this, we plan to continue our campaign to educate Members of both parties about our concerns with the draft proposal.
Chairman Camp’s legacy may be as the person who got the ball rolling on comprehensive tax reform. Since his time as Ways and Means Chairman will come to an end at the expiration of the current Congress, he announced on March 30 that he will not seek another term in Congress. He can retire with the knowledge that he was able to begin the tax reform conversation, along with the understanding of how difficult it can be to create legislation that affects virtually every part of the American economy.
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