Tax reform coalition dings Camp draft

A coalition lobbying for tax reform is objecting to the draft proposal from the House’s top tax writer, saying it would force some smaller businesses to pay more than corporate competitors.

{mosads}The Coalition for Fair Effective Tax Rates told House Ways and Means Chairman Dave Camp (R-Mich.) it was concerned that some businesses that pay taxes through the individual code – so-called “pass-throughs” – would pay more than those organized as corporations.

Camp’s plan reduces the top corporate rate, currently at 35 percent, to 25 percent over a five-year span. But while the vast majority of individual taxpayers would pay no more than 25 percent, Camp would also hit a small number of individuals with a 35 percent bracket. The current top individual rate is 39.6 percent.

“We are concerned that the draft’s complicated set of exemptions, surtaxes and wide disparity between the top tax rate for pass-through businesses and corporations will only exacerbate the already wide variance in effective tax rates,” the effective tax rate coalition, chaired by the National Federation of Independent Business and the Retail Industry Leaders Association, wrote to Camp.

Manufacturing income would be exempted from the 35 percent bracket, but it would hit other businesses.

“Tax reform should simplify the tax code, not make it, in certain instances, more complex,” the coalition wrote.

The coalition was formed last year to focus on evening out the current effective tax rates paid by certain sectors. The retail industry, for instance, has among the highest effective tax rates among U.S. industries.