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Geithner: Tax reform debate in 'first inning'

Treasury Secretary Timothy Geithner said in a recent interview that tax reform discussion is in “the first inning” and stressed that lowered corporate tax rates would help businesses compete by leveling the playing field. 

In an interview with The Wall Street Journal published Thursday, Geithner also said the statutory corporate tax rate of 35 percent — expected to soon be the highest in the developed world — needed to be closer to the rate of America’s major trading partners. 

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“Lowering rates, removing the distortions in the present system, helps growth because it allows business to compete on the basis of performance and return rather than on their ability to get or protect special provisions in the tax code,” Geithner said. 

In his State of the Union address on Tuesday, President Obama called for corporate tax reform that would not add to the budget deficit. For his part, Geithner has started meeting with business leaders, academics and think tank officials to discuss the issue. 

Tax reform is an area where Republicans and Democrats appear to believe they can work together, but potentially thorny topics have emerged early in the debate — including whether a reform plan should be revenue-neutral.

In his interview with the Journal, the Treasury secretary seemed to make the case for an outcome that neither added to nor reduced the deficit.

“Most businesses understand that we have limited resources, that we can't raise taxes on individuals to lower business taxes and that unsustainable long-term deficits hurt growth too,” he said. He added that it wasn’t “realistic” to use corporate tax reform as a way to drive down the deficit. 

Geithner also said in the interview that the administration wanted to reduce companies’ incentive to move income overseas and that there was a “good case” for reforming both the corporate and individual tax structures.