Conrad: Tax code can be more progressive without higher rates

By Peter Schroeder - 11/09/12 11:57 AM ET

It is possible to make the tax code more progressive while lowering income tax rates, according to the top Democrat on the Senate Budget Committee.

Sen. Kent Conrad (D-N.D.), the chairman of that panel, told Bloomberg that a tax overhaul that targets certain deductions enjoyed primarily by the wealthy could be a way to avoid broad tax hikes while still making the tax code more progressive.

"It depends very much what you do with things like capital gains and dividends, what you do with other exclusions, tax credits and preferences, but it's entirely possible that you can have rates at 35 and have a more progressive system," he said on Bloomberg's "Capitol Gains," set to air Sunday.

Conrad's comments come days after House Speaker John Boehner (R-Ohio) said Republicans were willing to accept increased revenue, but not higher tax rates, so long as it is paired with spending cuts and entitlement reforms. Like Conrad, Boehner said Wednesday he wanted to see the increased revenue come from increased economic growth driven by a "simpler, cleaner, fairer tax code, with fewer loopholes and lower rates."

With the two parties looking to avert the "fiscal cliff" of automatic spending cuts and expiring tax cuts set to take effect at the end of the year, both sides have made indications of a willingness to compromise after spending much of the 112th Congress butting heads on tax hikes versus spending cuts. Conrad said he was encouraged by Boehner's remarks earlier in the week, and was confident the divided Congress could strike a deal.

"I heard something different in [Boehner's] tone and I heard something different in the language: an opening of the door to consideration of revenue, which has to be part of the puzzle," he said. "It's critically important for the country that we do this, and that we do it right and we do it in a balanced way. And, yes, I believe it can happen."

He added that he believes Congress, as it averts the fiscal cliff, will establish the framework for a broad deficit-reduction deal including tax reform, as well as a "down payment" on deficit reduction to make clear that Congress was not simply avoiding the cliff and ignoring the nation's fiscal woes. Then, when lawmakers return in 2013, the relevant committees will flesh out that framework with details in a more deliberative fashion.

"I really am quite optimistic," he said.