By Bernie Becker - 02/26/14 11:19 AM EST
House Ways and Means Committee Chairman Dave Camp (R-Mich.) would roll back several big, and popular, tax provisions in the long-awaited tax reform plan he's releasing Wednesday, according to a Joint Committee on Taxation analysis obtained by The Hill.
His plan also lowers the cap on the mortgage interest deduction from $1 million to $500,000, reduces rates for the Earned Income Tax Credit (EITC) and taxes certain contributions to 401(k) plans.
The Ways and Means Committee chairman reaches the House GOP goal of reducing the top individual rate to 25 percent. But he does that with a 10 percent surtax on certain family income over $450,000, a maneuver that some conservatives say just means the top tax rate in the plan is actually 35 percent.
Stephen Moore of the Heritage Foundation, one of those conservatives, called the rate "still too high and an unnecessary nod to the class warriors on the left."
But Heritage Action, the foundation's political arm, gave a rousing welcome to Camp's plan, saying the Ways and Means chairman was right to circulate a draft that would make established interests uncomfortable.
“This tax reform proposal is an important step in launching a debate on how to revive the American economy after years of mismanagement. Chairman Camp framed the fight perfectly," Michael Needham of Heritage Action said in a statement.
"While not perfect, there is much to applaud in the Chairman’s work, and we look forward to working with the House to improve this legislation and provide the American people with the economic opportunities they deserve.”
Camp, speaking to reporters on Wednesday, defended the surtax, noting that the Joint Committee on Taxation classified the top rate as 25 percent, and that 99 percent of taxpayers would pay that level or below.
“There’s tremendous simplification by going from seven brackets to two,” Camp said.
On the corporate side of the tax code, Camp also reduces the rate to 25 percent, by taking two percentage points off the current 35 percent rate a year over a five-year span.
Camp rolls back an accelerated cost recovery system, stretches out depreciation schedules and installs a system that would shield most corporate offshore income from U.S. taxation.
His plan also would change the popular research-and-development tax credit and a tax break used by advertisers.
— This story was updated at 1:02 p.m.