Given the gridlock in Congress, neither the Democrat Obama, who included the tax reforms in his fiscal 2015 budget, nor Camp, the Ways and Means Committee chairman, has much chance of success. But the overlap may one day form the basis for the first tax revamp since 1986.
Here is a list of tax changes in the president’s budget that Camp also highlighted for reform.
* Carried interest.
The carried interest tax provision allows private equity partners to pay lower taxes on large portions of their incomes. Camp wants to eliminate this tax break, putting him at odds with other Republicans who steadfastly defend it. Obama’s budget reiterates his longstanding call for repealing carried interest, which helped former Republican presidential hopeful Mitt Romney pay a low effective tax rate, from his days at Bain Capital, the private equity firm he co-founded in 1984. Eliminating carried interest could raise $17.4 billion over 10 years, according to a November 2013 estimate from the Congressional Budget Office.
* Taxes on the wealthy.
Obama renews past tax proposals for raising taxes on the wealthy, including the “Buffett tax” that phases in a 30-percent tax rate on income above $1 million and caps on itemized deductions. Camp’s plan caps itemized deductions for individuals making $400,000 a year. It also limits tax savings from municipal bond interest, healthcare and retirement contributions.
* Self-employment payroll taxes.
Obama and Camp both favor repealing a tax loophole benefiting certain self-employed individuals. Wealthy individuals working for themselves, especially those offering consulting services, can avoid paying taxes for Medicare and Social Security programs. In his budget, Obama says this loophole costs $5 billion a year in lost revenue.
* Oil and gas.
While Republicans usually defend corporate oil and gas tax breaks whenever Obama targets them for repeal, Camp’s reform plan would eliminate the industry’s tax breaks and preferred accounting rules. Obama recommends repealing $4 billion in tax subsidies for oil, gas and other fossil fuel producers.
* Retirement savings reform.
Obama proposes capping the amount of money wealthy individuals can put in tax-protected savings accounts for retirement. In addition to setting similar retirement savings limits for the wealthy, Camp’s reform plan eliminates the traditional Individual Retirement Account in favor of the Roth IRA, which allows older Americans to withdraw their savings tax-free in retirement.
* Research and development tax credit.
Businesses can claim a tax credit when they book costs for research expenses and employees doing innovative work. In a rare instance of agreement to bolster a tax expenditure, both Obama and Camp want to make permanent the R&D tax credit. The tax credit expired for 2014 and has yet to be renewed by Congress this year.
* Prevent corporate tax avoidance.
Obama’s aims to crack down on what he sees as offshore corporate tax loopholes. To prevent corporate tax dodging, Obama’s budget would limit the ability of U.S. technology companies to shift profits abroad by housing valuable software overseas. Camp proposes limiting offshore tax avoidance while lowering corporate taxes to encourage U.S. companies to repatriate foreign profits.
Patrick Temple-West is a correspondent for Reuters in Washington, D.C.