Representative Dave Camp’s Proposed Draft Legislation on Tax Reform

Last week, Representative Dave Camp (R-MI), Chairman of the House Committee on Ways and Means, unveiled draft legislation on tax reform that would include a 10 percent tax on municipal bond interest for joint filers with incomes over $450,000. The bill would eliminate all advance refundings, bank qualified bonds, and private activity bonds. It would also repeal the ability to issue any new investor credit or “direct pay” bonds. Of course, the proposal would make many other changes to the tax code in addition to the changes to the municipal bond provisions, and the chance of the bill being enacted this year has been described as “slim to none.” However, these proposed changes to the treatment of municipal bonds should not be ignored. Unless objections to the bond provisions are communicated to our elected officials, they may be included in future tax reform legislation as offsets for additional spending, or as part of broader tax reform proposals.

At this time, it does not appear that Representative Camp’s proposal is part of a broader Republican effort on tax reform. As reported by Politico, when asked by reporters if the bill could be considered the House Republicans’ position on tax reform, Speaker John Boehner (R-OH) said "you're getting a little ahead of yourself."