By Bernie Becker - 03/17/11 04:06 PM EDT
Rep. Dave Camp, the chairman of the House Ways and Means Committee, wants to lower the tax rate to 25 percent for both individuals and corporations.
Camp sees lowering the top rate to 25 percent as a key part of tax reform, but the Michigan Republican also signaled to reporters off the House floor on Thursday that overhauling the tax code could be a lengthy process.
Asked about how much revenue it would take to lower rates to 25 percent, Camp responded that he didn’t want to “put a fence around what we’re trying to do.”
“We just need to discuss it all,” Camp added. “But I thought it was important to say, how low can we get the rates if we change other aspects of the code.”
The chairman also noted that the United States is in the minority in using a worldwide tax system for corporations, where a company's income from abroad can also be taxed. In a territorial system, which many other countries use, just the income raised in that country is taxable.
Camp first specified the goal of 25 percent rates in an interview with The Wall Street Journal. Washington officials on both sides of the aisle have given general support to the idea of lowering rates while eliminating many tax loopholes and breaks in recent months, but those statements have often been light on specifics.
As it stands, the highest marginal corporate tax rate is 35 percent. The tax-cut compromise enacted late last year preserved the top individual rate of 35 percent, enacted during the George W. Bush administration, through the end of 2012. But in practice, some companies and individuals who are in those top brackets pay far less due to credits and deductions.
Camp and Sen. Max Baucus (D-Mont.), the chairman of the Senate Finance Committee, released statements this week saying they wanted the tax code to help spark job creation and had instructed Congress’ Joint Committee on Taxation to conduct specific research dealing with tax reform.
Still, as lawmakers on both sides acknowledge, it could be difficult to get a tax reform package passed this Congress, as Democrats and Republicans have already signaled they have different ideas on issues including whether a tax reform package should be revenue-neutral at first.
The Obama administration has also expressed more of an interest in reforming the corporate tax code, while some lawmakers, including Camp, prefer a more comprehensive approach.
A bipartisan group of senators is also working on legislation guided by President Obama’s fiscal commission, which used a tax code revamp to help narrow long-term deficits.
Camp does not appear to be looking at tax reform as a way to cut into deficits, the Journal reported — adding that tax experts said that, to completely offset cutting rates to 25 percent, it could take around $2 trillion in revenue over 10 years.