As our loyal readers surely know, House Republicans have proposed a budget calling for up to $5.7 trillion in tax cuts as part of deficit-neutral tax reform, but they have yet to propose a single cut in tax expenditures (credits, deductions, and other tax preferences) to begin filling this huge revenue hole.
Now, Ways and Means Committee Chairman Dave Camp (R-MI) has taken a major tax expenditure off the table: the deduction for charitable donations. “I think it is important not to cap that area,” he said yesterday in response to a question, Tax Notes Todayreports.
This isn’t the Republican plan’s first political reality check. As we noted in April, a Ways and Means hearing examined the mortgage interest deduction, one of the largest tax expenditures (as is the charitable deduction) and considered ripe for reform across the political spectrum. But top Republicans on the committee “made clear . . . that they plan to proceed with caution when it comes to deciding [its] fate,” according to Politico.
The mortgage interest and charitable deductions benefit a wide cross-section of American taxpayers so, not surprisingly, they enjoy broad public support. That’s true, as well, of the other leading tax expenditures (such as the tax-free treatment of employer-provided health care) that policymakers would have to scale back significantly to have any hope of offsetting the huge proposed tax cuts.
Chairman Camp’s statement is just the latest sign of how at odds with political reality the Republican plan is.