Chamber offers tax reform wish list

In its statement, the Chamber calls for rewriting both the corporate and individual codes, and for lowering rates below the current top levels of 39.6 percent for individuals and 35 percent for corporations. The tax code should be comprehensively rewritten, the group said, in large part because many businesses – so-called pass through entities – pay taxes through the individual code. 

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The Chamber did not set a target for rate reduction, but did say that the both the effective and statutory corporate rate was “completely out of step” with other industrialized countries.

On other fronts, the business group says it wants to limit taxes on capital gains and dividends, both of which went up as part of the fiscal-cliff deal, and to maintain strong incentives for research and development.

It also wants to install a so-called territorial system, which would limit U.S. taxation of corporations’ offshore income – an idea shared by top Republicans like Ways and Means Chairman Dave Camp (R-Mich.).

And the Chamber says that the code should be simplified, and should be reformed in a manner that gives businesses more certainty.

The group, however, is more silent on what tax breaks it would be willing to give up in a revamp of the tax code.

Camp and GOP leaders have said they want tax reform to be revenue-neutral, meaning that any rate reductions would be offset with savings elsewhere in the code. House Republicans have set a goal of reducing the top corporate and individual rates to 25 percent.

The top tax writer in the Senate, Finance Chairman Max Baucus (D-Mont.), is also seeking a broad rewrite of the tax code, and Finance members have started their own set of meetings to try to move toward an agreement.

But top Democrats have also said that more revenues are needed to reduce deficits.

Rep. Sandy Levin (D-Mich.), the ranking member at Ways and Means, and other Democrats have also said that some of the more costly tax breaks, like the deduction for home mortgage interest, broadly help the middle class, and have questioned the GOP goals for rate reduction.

In its Wednesday statement, the Chamber did endorse “dynamic” scoring, which tries to take into account taxpayer responses to changes to the code. The Chamber also says that tax reform should not target one industry over another.

Congressional Republicans have long favored dynamic scoring, and GOP senators pushed through an amendment favoring the idea to the budget last month, with the help of some Democrats.

But some economic analysts and Democrats have questioned dynamic scoring, saying it’s difficult to measure how tax code changes impact behavior. Democrats have also targeted tax breaks used by the oil-and-gas industry in recent years.