By Bernie Becker - 03/10/14 04:05 PM EDT
Sen. Marco Rubio’s ideas for overhauling the tax code, which he previewed on Monday, would contrast sharply with the plan from the House’s top tax writer, Rep. Dave Camp (R-Mich.).
“This fair and equal treatment would end the crony capitalist loopholes that benefit politically connected corporations,” Rubio said at a speech at Google’s Washington headquarters.
“Allowing businesses to immediately write-off all investments will not only result in a lower tax burden, it will create an incentive to invest, leading to job growth,” added Rubio, who is widely rumored to be a 2016 presidential contender, but has found himself hurt in certain conservative circles for his support of immigration reform.
That tax proposal goes in a different direction from Camp, the House Ways and Means chairman, who released a broad tax reform draft in late February that would force businesses to write off investments over a longer period of time.
Camp’s draft repeals a range of special depreciation and cost recovery schedules, as part of his plan to reduce the top corporate tax rate from 35 percent to 25 percent over a five-year period without adding to the deficit.
Under Camp’s plan, extending certain depreciation schedules would raise hundreds of billions of dollars in revenue over a 10-year period. Camp has said he hopes to hold hearings on his tax reform plan, but the bipartisan consensus is that there’s little chance for the code to be overhauled in the current election year.
During Monday’s speech, Rubio didn’t say when he and Lee would release their legislation, making it difficult to determine how much their proposal on deducting investments would cost.
Experts say Rubio and Lee would likely still be able to craft a tax reform plan that didn’t add to the deficit, even with the proposal for immediate deductions.
Rubio added that his tax plan would also shift the U.S. to a so-called “territorial system,” which shields most offshore corporate income for American multinationals from U.S. taxation.
The Florida Republican, in making the case for his plan to quickly write off investments, said the proposal would encourage companies to invest their profits, instead of just stashing them in the bank. Some conservatives have criticized Camp’s proposals for stretching out depreciation schedules, even if they complimented much of the broad plan.
“This cash is just sitting there,” Rubio said, noting estimates that U.S. companies are sitting on as much as $5 trillion in profits. “But under the changes we are working on, the more a business invests, the less the federal government gets to take away. That serves as a powerful incentive to invest, grow, hire and give raises.”
A fact sheet released by Rubio’s office adds that the senator wants to tax corporations and small businesses that pay taxes through the individual system at the same rate.
Camp’s plan would also shift to a territorial system, but would tax certain businesses that pay through the individual tax code at a higher rate. Less than one percent of individual taxpayers would pay in a 35 percent bracket under Camp’s plan.
Lee, a favorite among conservatives, released a tax reform bill last year that focused on the individual system and sought more robust preferences for families. The Tax Policy Center, a project of the Brookings Institution and the Urban Institute, said recently the plan would lose around $2.4 trillion over a decade.