GOP tax writer to release reform draft on financial products

Camp and Senate Finance Committee Chairman Max Baucus (D-Mont.) are both advocates for reforming both the corporate and individual tax codes. The White House has put more emphasis on reforming corporate taxes, with all sides agreeing the current top rate of 35 percent is too high.

But key differences between Democrats and Republicans remain on taxes, as the two parties debate how best to rein in deficits and further spur the economy. 

Democrats, for instance, have said that future budget negotiations should include more revenue increases, after a “fiscal cliff” deal that raised some $630 billion in tax increases. 

But Republicans have said they will not agree to any more revenue increases, and that the elimination of tax breaks should solely go toward reducing rates. 

At the 2011 joint hearing, both Camp and Baucus expressed concern that there was too much complexity in how financial products are taxed, and that the current system allowed similar instruments to be taxed in vastly different ways. 

For instance, corporations are currently allowed to deduct their taxes for interest paid on debt, and Baucus noted at the hearing that the use of derivatives had skyrocketed in the previous decade. 

“The complexity has been further exacerbated by the tendency of Congress to enact tax legislation affecting a particular financial product without evaluating whether or not the approaches would provide more uniformity or simplicity to the existing taxation of future financial products,” Camp said at the hearing.