–Senate Budget Committee Chief: Tax Reform Would Spur Growth, Jobs
–Will Need Revenues of About 20% of GDP to Fix Deficit
By John Shaw
WASHINGTON (MNI) – Senate Budget Committee Chairman Kent Conrad
said Thursday “fundamental tax reform” is needed to tackle the two
maladies that are hampering the American economy: sluggish economic
growth and soaring budget deficits.
In a hearing by the Senate Budget Committee on tax reform, Conrad
said “the state of the tax code is indefensible,” and it is “completely
out of date.”
Conrad said the American tax code is hugely complicated, packed
with special breaks, economically inefficient, and harmful to the smooth
functioning of the economy.
“We need to focus like a laser on what will help us grow this
economy,” Conrad said. Tax reform is needed to “help spur economic
growth and job creation.”
A better functioning tax code would remove many of the nearly $1.2
trillion in annual tax expenditures, thus allowing tax rates to fall and
revenues to rise, he said.
Annual revenues of about 20% of GDP will be needed to reduce
deficits and put the budget into better balance, he said. When the
budget was creating surpluses in the late 1990s and early 2000s,
revenues were between 19.5% and 20.6% of GDP.
Conrad repeated his view that the U.S. needs a “comprehensive
deficit reduction plan” and that tax reform is integral to this effort.
Earlier this year, Conrad has said the U.S.’s fiscal situation now
requires a 10-year deficit reduction plan that is even greater than the
$4 trillion package developed by the Simpson-Bowles committee more than
a year ago.
He has said his “fondest wish” would be for Congress to approve a
deficit reduction plan of about $5.5 trillion over a decade.
Congress should put in place this kind of plan now and phase it in
carefully so that major deficit cutting occurs only after the recovery
has fully taken hold, Conrad has said.
** Market News International Washington Bureau: (202) 371-2121 **
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