Geithner: Corporate tax reform can come first

At a hearing of the Senate Finance Committee, Geithner said that corporate tax reform could come first, but that progress on the issue could not be put off.

The secretary was responding to questions from Sen. Ron Wyden (D-Ore.), a longtime proponent of tax reform and one of the congressional advocates for tackling corporate and individual tax reform simultaneously. Prominent Republicans such as Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, also favor a more comprehensive tax reform.

During his questioning, Wyden noted that a vast number of businesses in effect pay taxes as individuals and that Ben Bernanke, the chairman of the Federal Reserve, was among those who have indicated that the two codes should be looked at in tandem.

“Dr. Bernanke and others have pointed out that we actually may end up with a bit more distortion because of the interaction between the individual provisions of the code and the corporate provisions,” the Oregon senator said. 

But in his response, Geithner signaled that Congress should perhaps revisit whether certain businesses are allowed to choose how they file.

“It’s not a fundamentally sustainable balance now,” Geithner said. 

Geithner and lawmakers on both sides of the aisle expressed the need for tax reform at the Wednesday hearing. But their comments on the issue remained fairly general, and potential roadblocks, such as whether a corporate tax reform package should be revenue-neutral, also bubbled up. 

For his part, the Treasury secretary maintained, as he has before, that the administration thought a revenue-neutral plan was a necessity. But some Republicans and business leaders have expressed that revenue collection should not necessarily be a reform package’s top priority.