High-level donors are sending a message to Washington's Republicans: Stop Rep. Dave Camp's plans
to increase taxes on banks and the wealthy or lose your big dollar donations.
The Michigan Republican lawmaker's plan, includes requiring big banks to pay a new levy on assets, reports Bloomberg
. Further, the plan seeks to remove preferential treatment for private-equity managers' carried interest, and Wall Street's power players are plenty mad about the proposals.
President Barack Obama's bank tax plan applies to banks that have more than $50 billion in assets, but Camp's affects the largest banks and insurers. If it would pass, the levy would apply a .0035 percent rate to each company's total consolidated assets, after a $500 billion exemption, reports Bloomberg. The tax would not only affect banks, but other important financial institutions, such as Prudential.
A GOP lobbyist told Politico
that private equity and investment firms have been telling key Washington Republicans that their commitments for fundraising "have been canceled for the foreseeable future."
Further, lobbyists representing Bank of America, Goldman Sachs and J.P. Morgan, along with other powerful Wall Street interests, are meeting lawmakers to learn how much the proposed tax would cost their clients.
Camp's tax plan is putting Republicans at the risk of losing campaign cash as the 2014 elections near. This is a crucial year, as the GOP is trying to win back the Senate, and many incumbent Republican lawmakers are facing serious challenge from tea party groups that want to throw them out of Washington.
The securities and investment industry already has directed $3.5 million to the national Republican Party this cycle, according to the Center for Responsive Politics, and in 2012, the financial industry contributed nearly $10 million.
House Republicans are trying to calm the growing anger. Thursday, House Majority Leader Eric Cantor, R-Va., told lobbyists that the Camp bill is only a "draft."
Rep. Tom Cole, R-Okla., also pointed out that lawmakers can use the legislation, which isn't going to be voted on, as a talking point.
“It allows you to tell your energy people ‘look, I’m on your side,’” Cole said. “It lets you distance yourself from parts that are unpopular.”
In addition, House Speaker John Boehner's Chief of Staff Mike Sommers joined Policy Director David Stewart in a meeting with 50 lobbyists in Naples, Fla. The meeting, held before the Camp plan was released and after the the National Republican Congressional Committee retreat, was arranged to discuss the plan. People there were worried about the tax plan, but came away with the impression it would never come up for floor discussion.
Further, other Republicans are distancing themselves from Camp, whose term as Ways and Means Committee chairman is nearly over.
"I'm telling my guys, 'look, we gotta win on Nov. 14, so don't get way out there,'" said Texas Republican Rep. Roger Williams. "I would just say to those that are frustrated, and I’ve heard it too, it’s a work in process is all it is. It’s not a final draft. It’s some ideas.”
However, Cam's tax plan could also have impact on future tax negotiations, which is concerning the financial sector.
But the financial sector won't be all that's affected, said Rep. Lynn Westmoreland, R-Ga. Realtors are also angry about the plan, which would put limits on home owners deducting mortgage interest from their tax bills.
Camp's plan also calls for top earners to use Roth-style retirement accounts and depreciate expensive holdings, such as corporate jets, more slowly, reports Bloomberg. Other changes may include curbing tax breaks for state and local taxes, along with municipal bonds.
The plan is geared to simplify the tax system while continuing to bring in the same amount of revenue and without giving high-income earners large tax breaks.
“Our code is overly complex, as I like to say, 10 times the size of the Bible with none of the good news,” Camp said Wednesday on CBS’s “This Morning” program. “It’s really a wet blanket over our economy.”
Camp's proposal would be the largest overhaul of the tax system since 1986, but is not likely to happen this year, said Senate Minority Leader Mitch McConnell.
"We will not be able to finish the job, regretfully, in 2014,” the Kentucky Republican said. “I have no hope for that happening this year.”
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