When David Camp, chairman of the House Ways and Means Committee, released tax reform legislation last week, the first thing that sprang to my mind was Mount Washington’s Tuckerman Ravine. Looming just 2 miles or so from the Pinkham Notch visitor center, the greatest natural snow bowl east of the Mississippi beckons thousands of hardened skiers every year. The ravine’s 50-foot snow pack entices them with the promise of beauty and exhilaration. For those who conquer it, there’s a sense of achievement to which nothing else compares.
In Washington, the siren of tax reform calls out to devoted policy wonks in the same way. Designing a simpler tax system, like skiing the ravine, allows suitors to take on as much as they dare: corporate taxes, personal income taxes, or the entire 75,000-page code. At Tuckerman, the higher you climb, the steeper the grade. The ultimate thrill is reserved for those willing to attack the sheer face from the snowfields above.
Approaching the steep headwall from that relatively flat terrain, the slope falls away so abruptly that skiers cannot possibly see what awaits below — until they pass the point of no return. Tax seminars, hearings, and speeches are the Washington version of those snowfields. Everyone gets the opportunity to posture, talk about what could be, and pretend they know what lies over that horizon. But as Camp found out last week, talking and doing are different things. Once you crest the lip and are clinging to a 55-degree slope, the mountain becomes a lonely place.
Camp’s loneliness has nothing to do with ability. The Michigan Republican is an outstanding congressman with an effective, inclusive leadership style. But the “discussion draft” he made public contains something that makes most members of Congress uncomfortable: details. Every deduction, credit, exemption, and loophole makes the tax code more complicated, and simplification demands that they must go. Meaningful tax reform requires trade-offs. But when confronted with hard choices, most members of Congress start looking for a way to bail out.
Camp’s bill demonstrates the courage of his convictions. Rafts of deductions are capped, phased out, or eliminated altogether. The bill reduces the number of personal income tax brackets from seven to three: 10 percent, 25 percent, and an additional surcharge on income over $400,000. The corporate tax rate would drop from 35 percent today — one of the highest in the world — to 25 percent.
Wisely, Camp designed his bill to be revenue-neutral. It doesn’t attempt to raise or cut tax collections overall. Perhaps more important, it is “distributionally” neutral; he makes no effort to raise or lower taxes for the rich, the poor, or the middle class. This debate should be about how we pay, not how much — and about making the code and our entire economy more efficient, productive and fair.
Avoiding class warfare rhetoric makes for a smoother trail, but those who benefited from the code’s complexity will still be unhappy. Every wrinkle in the current tax code has its own constituency. Farmers, ranchers, teachers, caregivers, and gamblers — an endless list — are singled out within the law. Everyone loves the idea of simplicity, but getting there will require that we think of ourselves as taxpayers, not part of a special group.
To date, few in Congress have been willing to support the bill publicly. The more narrow-minded have clung to their opposition to the bill’s “bank tax,” which was designed to pay for future bailouts under the Dodd-Frank regulations passed in 2010. If that’s the biggest flaw they can find, fine. Drop that piece and get on with it. At least we’ll learn who has genuinely committed to reform and who just wants to pay lip service.
Most important, everybody needs to realize no one can possibly agree with every element in such a comprehensive bill. You need to believe that the fundamental economic fairness that comes from taking the plunge makes it worth the trouble . . . and then push over the edge.
A good friend once described his favorite Tuckerman moment, watching an enthusiastic father encourage a group of young teenagers to take on the headwall. “Come on guys!” he waved while crossing the upper lip. Catching an edge on his crucial first turn, he bounced and slid like a rag doll several hundred yards to the floor of the ravine. The young gaggle behind followed without incident, no worse for having witnessed the spectacle.
Camp’s tax reform effort is unlikely to pass, but his willingness to take the plunge with honesty and substance deserves enormous credit. Most important, if he inspires just a few to follow his courageous path, we may remember his pioneering run for a long time.