ENBARu0EB 0NTIL 1:SuPN Weunesuay, Febiuaiy 26, 2u14

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Washington, BC - Touay, Ways anu Neans Committee Chaiiman Bave Camp (R-NI)
ieleaseu uiaft legislation to fix Ameiica's bioken tax coue by loweiing tax iates
while making the coue simplei anu faiiei foi families anu job cieatois. Camp's
latest uiaft, the >*#+ &',-.$ ?61 -, @ABC<D spuis stiongei economic giowth,
gieatei job cieation anu puts moie money in the pockets of haiuwoiking taxpayeis.

Baseu on analysis by the inuepenuent, non-paitisan }oint Committee on Taxation
(}CT), without incieasing the buuget ueficit, the Tax Refoim Act of 2u14:

Cieates up to BEF $;((;-0 0'G %.;H#1' )'61-. I-J).
Allows ioughly KL %'.6'01 -, ,;('.) 1- 3'1 14' (-G')1 %-));J(' 1#+ .#1' J7
);$%(7 6(#;$;03 14' )1#08#.8 8'8M61;-0 (no moie neeu to itemize anu
tiack ieceipts).
Stiengthens the economy anu ;06.'#)') N.-)) O-$')1;6 /.-8M61 PNO/Q J7
M% 1- RSEC 1.;((;-0 (the equivalent of 2u peicent of touay's economy).

Baseu on calculations using uata pioviueu by }CT, 14' #H'.#3' $;88('T6(#)) ,#$;(7
-, ,-M. 6-M(8 4#H' #0 '+1.# RB<SAA %'. 7'#. ;0 ;1) %-6:'1 fiom the combination
of lowei tax iates in the plan anu highei wages uue to a stiongei economy.

O;)6M));03 14' 0''8 1- ,;+ ?$'.;6#U) J.-:'0 1#+ 6-8'< "#$% )#;8< "It is no seciet
that Ameiicans aie stiuggling. Fai too many families haven't seen a pay iaise in
yeais. Nany have lost hope anu stoppeu looking foi a job. Anu too many kius
coming out of college aie buiieu unuei a mountain of uebt anu have few piospects
foi a goou-paying caieei. We've alieauy lost a uecaue, anu befoie we lose a
geneiation, Washington neeus to wake up to this ieality anu stait offeiing conciete
solutions anu uebating ieal policies that stiengthen the economy anu help
haiuwoiking taxpayeis. Tax iefoim is one way we can uo that."

Buiing Camp's thiee yeais as Chaiiman of the Ways anu Neans Committee, both
Bemociats anu Republicans on the Committee have investeu significant time anu
eneigy to bettei unueistanu how touay's bioken tax coue affects families anu job
cieatois. uoing to gieat lengths to ensuie that the ieal expeits - inuiviuuals,
families anu job cieatois of all sizes anu inuustiies - weie a pait of the conveisation,
this tianspaient, "eveiyone gets a seat at the table" piocess involveu moie than SA
)'%#.#1' "-03.'));-0#( 4'#.;03) ueuicateu to tax iefoim, BB )'%#.#1'
J;%#.1;)#0 1#+ .',-.$ G-.:;03 3.-M%) cieateu in conjunction with Ranking
ENBARu0EB 0NTIL 1:SuPN Weunesuay, Febiuaiy 26, 2u14
Nembei Sanuei Levin (B-NI), 14.'' 8;)6M));-0 uiafts looking at uisciete aieas of
the tax coue anu $-.' 14#0 BC<AAA %MJ(;6 6-$$'01) #1 *#+&',-.$EN-H.

"This legislation uoes not ieflect iueas solely auvanceu by Bemociats oi iueas solely
auvanceu by Republicans, noi is it limiteu to the halls of Congiess," saiu Camp.
"Insteau, this is a compiehensive plan that ieflects input anu iueas championeu by
Congiess, the Auministiation anu, most impoitantly, the Ameiican people. In othei
woius, it iecognizes that eveiyone is a pait of this effoit anu can benefit when we
have a coue that is simplei anu faiiei. I am hopeful that lawmakeis on both siues of
the aisle - anu paitneis at both enus of Pennsylvania Avenue - take a close look at
this plan anu shaie theii thoughts anu iueas, anu those of theii constituents. The
bottom line: just saying 'no' is not a solution. Washington must make ieal piogiess
on the ciitical issues of the uay, the most impoitant of which is stiengthening the
economy. We can, anu neeu, to woik togethei to ciaft a plan that fixes oui bioken
coue anu stiengthens the economy so theie aie moie jobs anu biggei paychecks foi
haiuwoiking taxpayeis."

V;34(;341) -, 14' *#+ &',-.$ ?61 -, @ABC ;06(M8'W
X'G Y08;H;8M#( #08 "-.%-.#1' &#1' 21.M61M.'W Flattens the coue by
ieuucing iates anu collapsing touay's biackets into two biackets of 1u anu 2S
peicent foi viitually all taxable income, ensuiing that ovei 99 peicent of all
taxpayeis face maximum iates of 2S peicent oi less. The plan also ieuuces
the coipoiate iate to 2S peicent.
Z#.3'. 21#08#.8 O'8M61;-0W Nakes the coue simplei anu faiiei by
pioviuing a significantly moie geneious, inflation-aujusteu stanuaiu
ueuuction of $11,uuu foi inuiviuuals anu $22,uuu foi maiiieu couples.
Z#.3'. "4;(8 *#+ ".'8;1W Incieases the chilu tax cieuit to $1,Suu pei chilu,
aujusts it foi inflation going foiwaiu anu expanus the numbei of families that
can claim the cieuit.
2;$%('.< Y$%.-H'8 *#+#1;-0 -, Y0H')1$'01 Y06-$'W Taxes long-teim
capital gains anu uiviuenus as oiuinaiy income, but exempts 4u peicent of
such income fiom tax - iesulting in a thiee peicentage point ueciease fiom
the maximum iates inuiviuuals pay touay on such income while also
achieving the lowest level of uouble taxation on investment income in
mouein histoiy.
X- ?9*W In auuition to loweiing tax iates foi families anu all job cieatois,
the plan iepeals the Alteinative Ninimum Tax (ANT) foi inuiviuuals, pass-
thiough businesses anu coipoiations.
5#);'. 58M6#1;-0 ['0',;1)W Auopts iecommenuations stemming fiom the
bipaitisan woiking gioups to consoliuate euucation tax benefits so, along
with the auuitional money fiom stiongei economic giowth, families can
moie easily affoiu the costs of a college euucation.
9-8'.0;\'8 Y01'.0#1;-0#( 27)1'$W Noueinizes the inteinational tax coue
foi the fiist time in moie than Su yeais while piotecting jobs, wages anu
piofits fiom being shippeu oveiseas.
ENBARu0EB 0NTIL 1:SuPN Weunesuay, Febiuaiy 26, 2u14
/'.$#0'01 &]O Y06'01;H'W Invests in innovation by making peimanent an
impioveu Reseaich & Bevelopment Tax Cieuit.
9-.' ?,,-.8#J(' V'#(146#.': While the plan geneially leaves 0bamaCaie
policies untoucheu anu foi a latei uebate on healthcaie, theie aie two main
exceptions given stiong bipaitisan suppoit foi: (1) iepeal of the meuical
uevice tax anu (2) iepeal of the meuicine cabinet tax, which piohibits use of
funus fiom tax-fiee accounts to puichase ovei-the-countei meuication
without fiist obtaining a piesciiption.
Y&2 ?66-M01#J;(;17W Ciacks uown on IRS abuses anu ieuuces massive waste,
fiauu anu abuse. The plan also contains piovisions piohibiting
implementation of iecently pioposeu iules affecting Su1(c)(4) oiganizations
anu pioviues victims with infoimation iegaiuing the status of investigations
into violations of theii taxpayei iights.
Y0,.#)1.M61M.' Y0H')1$'01W Beuicates $126.S billion to the Bighway Tiust
Funu (BTF) to fully funu highway anu infiastiuctuie investment thiough the
BTF foi eight yeais.
2;$%(;,;6#1;-0 ,-. 2'0;-.)W Reflecting a pioposal suppoiteu by AARP anu
ATR, the plan iequiies the IRS to uevelop a simple tax ietuin to be known as
Foim 1u4uSR, foi inuiviuuals ovei the age of 6S who ieceive common kinus
of ietiiement income like annuity anu Social Secuiity payments, inteiest,
uiviuenus anu capital gains.
"4#.;1#J(' N;H;03W Expanus oppoitunities to make tax-ueuuctible
contiibutions past the enu of the tax yeai, makes peimanent conseivation
easement incentives, simplifies exempt oiganization taxes anu sets a flooi
insteau of a cap to the amount of uonations that can be ueuucteu. The
economic giowth in this plan will inciease chaiitable giving by $2.2 billion
annually.
24.;0:) #08 2;$%(;,;') 14' Y06-$' *#+ "-8'W In auuition to easing
complexity anu compliance buiuens by auopting a laigei stanuaiu ueuuction,
an enhanceu chilu tax cieuit anu lowei iates, the plan iepeals ovei 22u
sections of the tax coue; cutting the size of the income tax coue by 2S peicent.

In keeping with pieviously ieleaseu uiafts, the Committee seeks input anu feeuback
on technical anu policy issues iaiseu by the uiaft ieleaseu touay. The Committee
also invites input on the accompanying technical explanation piepaieu by the }CT
staff, a uocument that coulu seive as the basis foi similai legislative histoiy on any
futuie tax iefoim legislation that may be consiueieu by the Committee.
Auuitionally, as it fuithei examines options aiising fiom the buugetaiy anu
economic analysis, the Committee is especially inteiesteu in ieceiving constiuctive
feeuback on aieas listeu below.

1. 5+1'08'.) /-(;67 PRB *.;((;-0QW The pioposal has been scoieu by }CT as ueficit
neutial; it uoes not inciease the buuget ueficit ielative to the piojecteu ueficits
foi the FY2u14-2S buuget winuow. CB0's ievenue baseline foi this peiiou
assumes that a numbei of tax policies expiie anu aie not ieneweu. Bowevei,
ENBARu0EB 0NTIL 1:SuPN Weunesuay, Febiuaiy 26, 2u14
CB0 has noteu that "|njeaily all of those piovisions have been extenueu
pieviously; some, such as the ieseaich anu expeiimentation tax cieuit, have
been extenueu multiple times." Incluuing a peimanent extension of these
policies woulu iesult in the ievenue baseline being almost $1 tiillion lowei ovei
the FY2u14-2S buuget winuow than piojecteu. In such a scenaiio, the pioposal
woulu theiefoie ieuuce the ueficit - mostly thiough ievenue incieases -
potentially by as much as $1 tiillion (without consiueiing all potential
inteiactions among those policies anu the pioposal). CB0 annually piesents an
"alteinative fiscal scenaiio" that assumes these tax piovisions aie maue
peimanent - the same assumption geneially useu foi spenuing piogiams in
CB0's tiauitional baseline. The Committee is inteiesteu in feeuback on which
(incluuing none oi all) of these expiiing tax piovisions shoulu be incluueu in the
ievenue baseline foi puiposes of ueteimining whethei the pioposal is ueficit
neutial.

2. O70#$;6 &'H'0M' PR^AA [;((;-0QW }CT's analysis shows that the auuitional
economic giowth that woulu iesult fiom the enactment of tax iefoim woulu
geneiate up to an auuitional $7uu billion in tax ieceipts ovei the FY 2u14-2u2S
buuget winuow as a iesult of incieaseu employment anu highei wages. This
auuitional ievenue, howevei, is not taken into account as pait of }CT's
ueteimination that the pioposal is ueficit neutial. As a iesult, unuei the
pioposal as cuiiently stiuctuieu, this auuitional ievenue woulu be available to
the Feueial goveinment foi a vaiiety of puiposes. The Committee is inteiesteu
in feeuback on how this auuitional ievenue shoulu be tieateu (e.g., shoulu it be
useu to fuithei lowei tax iates oi to pioviue othei tax benefits, shoulu it be
ueuicateu to ueficit ieuuction, oi shoulu it be ueuicateu to some combination of
the two).

S. V-M)'4-(8 Y$%#61W The pioposal has been scoieu by }CT as being
uistiibutionally neutial; it uoes not significantly change the shaie of taxes paiu
by oi the aveiage tax iate foi each income cohoit iepoiteu by }CT. Bowevei,
each income cohoit iepoiteu by }CT incluues a heteiogeneous mix of taxpayeis.
Foi example, the combination of lowei iates, the inciease in the size of the
stanuaiu ueuuction, anu the iefoims to the chilu tax cieuit anu EITC will affect
householus uiffeiently uepenuing on the numbei of chiluien in the householu
anu whethei the taxpayei files jointly. The Committee is inteiesteu in feeuback
as to whethei anu how these moie uetaileu ciicumstances shoulu be analyzeu
anu whethei theie aie ceitain uistiibutional outcomes that aie moie piefeiable
than otheis (e.g., effects on householus with multiple chiluien veisus householus
without chiluien within the same income cohoit).

4. 56-0-$;6 9-8'(;03W }CT's analysis of the pioposal incluues an analysis of the
macioeconomic effects of tax iefoim on the 0.S. economy, which is sometimes
iefeiieu to as a uynamic scoie. This uynamic scoie shows that the pioposal
woulu iesult in substantial auuitional economic giowth anu job cieation as
compaieu to the status quo. }CT useu two uiffeient economic mouels anu a
ENBARu0EB 0NTIL 1:SuPN Weunesuay, Febiuaiy 26, 2u14
vaiiety of assumptions to calculate the uynamic scoie. The two mouels take
uiffeient appioaches to moueling the impact of the pioposal on the 0.S.
economy. Foi example, one mouel, the NEu mouel, cannot fully account foi the
bieauth of the changes to inteinational tax policy maue by the pioposal anu
theiefoie unueistates the extent of auuitional investment in the 0.S economy,
paiticulaily foi investment in high-technology, IP-intensive sectois. The 0Lu
mouel, on the othei hanu, contains a fiscal constiaint that iequiies the uebt to
uBP iatio to be helu constant between the pie- anu post-iefoim economy, thus
failing to captuie the full benefits of ieuuceu buuget ueficits on the economy.
The Committee is inteiesteu in feeuback on the methouology anu paiametei
estimates useu by }CT in peifoiming the macioeconomic analysis anu
iecommenuations on how this analysis can be impioveu.

S. N.'#1'. "-$%(;#06'W The cuiient complexity of the tax coue makes compliance
uifficult anu facilitates billions of uollais in impiopei payments anu fiauu. The
most iecent estimate shows that the tax gap amounts to $4Su billion annually.
The pioposal incluues a numbei of iefoims that woulu substantially simplify the
tax coue anu impiove iepoiting anu compliance. This impioveu compliance is
paitially - but not fully - incoipoiateu into }CT's analysis of the pioposal. The
Committee is inteiesteu in feeuback on how to analyze the impact of the
pioposal on impioving compliance, closing the tax gap, anu ieuucing impiopei
payments anu fiauu. The Committee is inteiesteu in ieceiving analysis that
woulu quantify the extent of the impioveu compliance anu iecommenuations foi
how measuiements of impioveu compliance shoulu be factoieu into any analysis
in ueteimining whethei the pioposal is ueficit neutial.