Cantor: Tax reform could mean businesses pay higher rates

House Majority Leader Eric Cantor (R-Va.) said Wednesday that he favors broad-based tax reforms but acknowledged that could mean higher taxes for some.

Cantor, seen as an ardent fiscal conservative, said he doesn’t favor a tax hike. But he voiced support for proposed reforms that would eliminate a number of loopholes and exemptions, paired with a reduction in the overall tax rate. 

{mosads}”We’re for tax reform,” Cantor said on CNBC. “And tax reform may result
in certain entities, industries ending up paying more under a
much-reformed system where there are lower rates.”

The No. 2 House Republican acknowledged that such reforms could mean higher overall tax obligations for certain industries and entities, a shift that Cantor defended as eliminating “crony capitalist” benefits in the tax code.

“In a reformed tax code, what we’re saying is lower the rates, broaden
the base and get rid of the special-interest loopholes,” he added.

President Obama’s fiscal commission had made a similar proposal at the end of last year, and Sen. Tom Coburn (R-Okla.) last week suggested that a group of bipartisan senators working on their own fiscal plan, the Gang of Six, would include a similar plan in its eventual proposal.

But conservatives have already sent Republican leaders a stern warning about such proposals. Groups like Americans for Tax Reform and the Club for Growth have said they would consider any tax reforms that end up raising revenue as a tax hike, which could risk the ire of the conservative base. 

“That’s exactly what we’re talking about when we say broad-based tax reform,” Cantor explained. “You will have business entities that will end up actually paying more, because they found themselves in the beneficial posture of having loopholes, allowing them to reduce their taxes way below the stated rate.”

Cantor said the Ways and Means Committee was beginning work on some tax reforms, which he said could be included as part of a grand deal on deficit reduction in exchange for a vote to increase the debt ceiling.

The majority leader dismissed, though, any proposal to eliminate the tax breaks for oil and gas companies. Obama and Democrats in Congress have demanded a vote to do that after House Speaker John Boehner (R-Ohio) suggested Monday that those subsidies might be worth re-examining.

“It’s just funny to me that anybody could think that raising taxes on oil companies will bring gas prices down,” Cantor said.