Both parties agree the voluminous tax code needs a rewrite and the Democratic-led Senate and Republican-led House of Representatives will begin hearings soon on an overhaul.
“I do believe the country is ripe for tax reform,” Reid said at a news conference. “Our tax system is broken and needs to be fixed.”
“We all know the tax code is a disaster and any effort to simplify the tax code, to get the rates down, to make it more fair, I think we’d be open to discussing that,” McConnell said.
Treasury Secretary Timothy Geithner plans to meet next week with chief financial officers of major companies to talk about corporate tax reform in particular, a Treasury spokeswoman said.
Obama is making overtures to corporate America to mend fences after bruising battles over healthcare and financial reform during the Democratic president’s first two years in office.
Obama has said he is interested in finding ways to cut the 35 percent top corporate rate.
Analysts say Obama needs to push hard if tax reform is to have a chance of advancing. Most believe the next two years of hearings and debate will lay the groundwork for a potential overhaul if Obama is elected to a second term.
“Corporate tax reform efforts have been under way in Congress and the White House for years,” MF Global analyst Anne Mathias said. “2011 may finally be the time to get a deal done, but our odds are still under 50 percent.”
The Chamber of Commerce is drafting fundamental principles on corporate tax reform, which will include a lower tax rate but preserve several cherished tax breaks for companies.
Taxation of foreign income will be one key sticking point. Obama has several times proposed limiting deferral of taxes on income earned abroad, which could cost multinational companies tens of billions of dollars.
A host of deficit-fighting proposals have proposed cutting corporate tax incentives, such as a deduction used by oil and gas companies for domestic production.
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