The tax policy question du jour is: Does Rep. Dave Camp's forthcoming tax plan actually meet his goal of cutting the top rate on personal income to 25 percent?
An official analysis by the Joint Committee on Taxation suggests that the answer is yes. All but 0.9 percent of filers would fall either into the new 25 percent bracket or the new 10 percent bracket under Camp's plan. And no one would face the current top rate of 39.6 percent.
But lobbyists, independent analysts and other close observers of tax policy are already quibbling. For one thing, Camp would impose a 10 percent surtax on certain types of earned income over $411,000 for individuals and $464,000 for families, essentially creating a new 35 percent bracket -- at least for that 0.9 percent of filers.
Moreover, sources familiar with the plan say Camp (R-Mich.) would not eliminate a 3.8 percent surtax on investment income imposed on wealthy households to help pay for President Obama's Affordable Care Act. By this argument, 35 percent plus 3.8 percent equals a top rate of 38.8 percent -- awfully close to where it is under current law. Aides to Camp declined to comment.
But wait! What about "PEP and Pease," the current-law phaseouts that increase tax rates for the wealthy? Add those in, and the current top rate is actually closer to 44.6 percent -- making 38.8 percent look like a pretty good deal.
For now, it's unclear what Camp would do with PEP and Pease -- or any of the hundreds of special tax breaks and penalties that currently litter the code. But as Washington awaits the release of his full proposal on Wednesday, the debate over how he handles taxation of the nation's wealthiest households will continue to be a subject of obsessive focus.