–Republicans Likely To See Any Admin Tax Plan As Political Ploy
–Hill GOP Plans To Win Control of Congress Next Year, Write Own Bill

By John Shaw

WASHINGTON (MNI) – In comments to reporters this week, House
Speaker John Boehner accused President Obama of being in “total campaign
mode” since last fall. So it stands to reason Boehner and other
congressional Republicans are likely to view any tax reform plan offered
by the administration in the coming weeks as little more than a
political ploy.

In his 2011 State of the Union address, Obama made a vigorous case
for corporate tax reform, saying it was important to broaden the base of
taxable income while reducing the overall tax rate.

Following up Obama’s statement, Treasury began work on a corporate
tax reform white paper. There were reports last fall that Treasury was
almost done with the paper and might be releasing it soon. That paper,
nearly a year in development, has still not been released.

In his 2012 State of the Union speech, delivered this past Tuesday,
Obama made no mention of Treasury’s work and placed less emphasis on
comprehensive tax reform. He outlined several tax ideas to boost
American manufacturing, such as a credit for companies that move their
operations to the U.S. from overseas.

“Send me these reforms, and I’ll sign them right away,” Obama said
Tuesday night.

House Ways and Means Committee Chairman Dave Camp left the
president’s speech underwhelmed by Obama’s commitment to tax reform.

“Instead of focusing on tax reform that can create jobs, the
President spent his time talking about how he intends to take more money
away from employers, investors and savers in order to create new
carve-outs for the few industries and projects favored by his
administration,” Camp said in a statement.

“That is nothing more than the usual Washington game that has led
to a tax code already littered with lobbyist loopholes. Washington needs
to get out of this game of picking winners and losers and instead treat
all Americans and employers fairly,” he added.

A top White House aide, Jason Furman, said in a conference call
Wednesday that the administration will offer the framework of a tax
reform proposal in the coming weeks.

The framework, Furman said, would simplify the tax code, close
loopholes, and broaden the tax base. He said the administration supports
levying a minimum tax on profits that firms earn overseas and using
these revenues to “cut taxes here in America.”

A senior Republican congressional aide was dismissive of the
administration’s coming proposals.

“So the president, having sat on tax reform for three years, is
going to offer a proposal six months before the election — and expect
us to take it seriously? You’ve got to be kidding,” he said.

Congressional Republicans, apart from questioning Obama’s motives
on tax reform, also believe they are positioned to win control of both
branches of Congress and possibly the White House next year.

“We think there is a good chance we are going to control the House
and Senate next year so we can write our own tax reform bill next year,”
the GOP staffer said.

There will be a slew of tax issues on Congress’ agenda in the
coming months.

A House-Senate conference committee is now working to draft a $160
billion tax package that extends the payroll tax cut, renews
unemployment insurance benefits and prevents a deep cut in Medicare
reimbursements for doctors.

Congress passed a two-month extensions of these programs which will
expire at the end of February. Both Obama and congressional leaders say
they want to pass a one year extension of these programs, but there are
scores of policy details to resolve as well as a budget offset package.

House Republicans recommend paying for the package by extending a
federal employee pay freeze, increasing Medicare premiums for upper
income beneficiaries, and cutting funds from the new health care law.

Senate Democrats prefer to pay for the package by imposing a surtax
on those with incomes over $1 million.

Additionally, and of far greater fiscal consequence, the Bush era
tax cuts of 2001 and 2003 are set to expire at the end of this year.

Republicans have called for renewing all the Bush tax cuts. Obama
has called for extending all of those, except for those in the two top
income tax brackets.

Renewing all of the Bush era tax cuts would cost about $4 trillion
for the decade. Obama’s preferred approach would cost more than $3
trillion over a decade.

** Market News International Washington Bureau: (202) 371-2121 **

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