Feb. 26 (Bloomberg) — The tax plan by House Ways and Means Committee Chairman Dave Camp would further limit the mortgage-interest break and end the deduction for state and local taxes, according to a nonpartisan congressional summary.
Camp's plan to be unveiled today, the most comprehensive reconstruction of the tax code since 1986, would reduce individual and corporate tax rates. The corporate rate cut to 25 percent from 35 percent would be phased in over five years.
The summary by the Joint Committee on Taxation is dated Feb. 21. Camp, a Michigan Republican, is scheduled to release the full plan at 1:30 p.m. today in Washington.
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The proposal probably won't advance in Congress this year, in part because of a partisan disagreement over whether tax-code changes should raise additional revenue. Camp's plan would avoid increasing the budget deficit.
Camp's plan would push more people into Roth-style retirement accounts, raise taxes on private equity managers' carried interest and impose a tax on the assets of the biggest banks and insurers.
The mortgage proposal would reduce the amount of mortgage debt eligible for the interest deduction to $500,000 from $1 million, according to the document. The state and local tax break, which particularly benefits residents of high-tax states such as New York and New Jersey, would be eliminated.
High Earners
For high earners, the Camp plan contains some new provisions, according to the document. The benefits of the lowest tax bracket and the standard deduction would be lost as their income rises, and very top earners would face a 10 percent surtax above the top rate of 25 percent.
The surtax would apply to annual income of married couples starting at about $450,000 and single taxpayers at about $400,000.
The surtax would apply to a definition of income that is much broader than regular taxable income, including employer- provided health insurance, certain retirement contributions and municipal bond interest. It wouldn't apply to charitable contributions or income from domestic manufacturing.
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