The Obama administration isn’t proposing a comprehensive rewrite of the U.S. tax code because Republicans in Congress aren’t ready to discuss it, Treasury Secretary Timothy F. Geithner said.
A necessary, inevitable tax overhaul can’t be achieved because discussions with Republicans last year on deficit reduction proved “impossible,” Geithner said today in an exchange with Representative Dave Camp, the chairman of the House Ways and Means Committee, at a panel hearing.
“Your side walked away from the table three separate times,” Geithner said. “You guys were not ready.”
Camp, a Michigan Republican, disputed Geithner’s characterization, saying it was unfair to compare private meetings to consideration of a public tax overhaul proposal that is needed.
“Why isn’t there a comprehensive reform plan coming from this administration?” Camp asked. “What we’re asking is for some sort of public leadership stand on this issue.”
Camp criticized President Barack Obama’s fiscal 2013 budget plan because it includes tax increases that he said would put U.S. companies at a “competitive disadvantage” around the world.
“The budget is replete with proposals that will take more money away from employers, investors and savers,” Camp said.
In the administration’s budget plan, released Feb. 13, the top tax rate on ordinary income would increase to 39.6 from 35 percent while the top tax rate on capital gains would rise to 20 percent from 15 percent. Dividends would be taxed as ordinary income instead of at a 15 percent preferential tax rate.
The hearing demonstrated the gaps between Republicans and Democrats on tax policy and on whether tax increases should be used to reduce the budget deficit.
“Focusing these revenue proposals on the top 2 percent, those who have fared the best in the last decade of financial excess, is far better for the economy and more fair for the American people than cuts of equivalent magnitude” to Medicare and other programs, Geithner said.
The Treasury secretary said the administration will release a framework for changing the corporate tax code this month. He said he would prefer a tax-code overhaul with principles the administration has outlined to the targeted increases in the budget plan.
“It’s coming,” Geithner said of a tax-code overhaul. “It’s inevitable. It’s necessary, and we can’t keep putting it off.”
© Copyright 2015 Bloomberg News. All rights reserved.