WASHINGTON Feb 13 President Barack Obama's
choice to be the next U.S. Treasury secretary said on Wednesday
that revamping the tax code is "at the very top" of his
priorities, and he offered some olive branches to Republicans to
Tax reform took center stage at the Senate Finance
Committee's confirmation hearing for Jack Lew, Obama's nominee
to replace Timothy Geithner. Lew told lawmakers that Obama is
committed to a long-sought tax code overhaul and said that
lowering all tax rates is possible if tough choices are made.
"It is possible. If we roll up our sleeves and are willing
to do the hard work, we can both get our fiscal house in order
and work on the rate structure," Lew, who has served as Obama's
chief of staff and budget director, told the panel.
Republican Senator John Thune of South Dakota presented Lew
with huge stacks of paper that were copies of the tax proposal
offered by the Treasury Department under Republican President
Ronald Reagan in 1986, intended to contrast with the slim
pamphlets on a tax rewrite thus far offered by Obama.
Lew responded that the 1986 overhaul, in its final form,
resembled neither the huge stack nor the thin pamphlets after it
was hashed out by lawmakers over many months in congressional
hearings in conjunction with the Treasury Debarment.
Still, Thune said the White House must play a larger role.
"This is not going to get done unless there is leadership
out of the White House," he said. "There are lots of
constituency groups out there that are very committed to the
current tax code."
Obama and his fellow Democrats, along with Republicans, say
they back a revamp of the tax code, but the odds of achieving
that are clouded by constant fiscal fights and a wide divide
over whether new revenue is needed.
"In clearing out the tax code and broadening the base, there
is room to raise the revenue that we need," Lew said.
Many experts define a reform of the tax code as requiring
broadening the base and lowering tax rates.
"Broadening the base" means increasing the amount of income
subject to taxation, which means paring tax breaks, of which the
biggest are those for investment earnings, mortgage interest,
charity and others prized by industries and many individuals.
Republicans pressed Lew on lowering the corporate tax rate,
now at 35 percent and the highest among developed countries.
Obama has backed trimming that top rate to 28 percent, while Lew
said it would be challenging to get it down to the Republicans'
goal of 25 percent.
Lew was also asked about moving to a "territorial" tax
system favored by big business and Republicans, where most of
corporate income earned offshore is exempt from U.S. taxes.
Under the current worldwide tax system, most income,
wherever it is earned, is subject to U.S. tax, though a plethora
of laws allow companies to defer or avoid taxes on these
Lew reiterated Obama's call for a minimum tax on foreign
profits, which the president revived on Tuesday in his State of
the Union speech. But Lew said "there is room to work together"
when asked if he is open to a more territorial-like system.