Treasury Secretary Timothy Geithner talked about the Obama administration’s support for corporate tax reform during and after a speech on Wednesday.
The speech, at Johns Hopkins University’s School of Advanced International Studies, was mainly about the economic relationship between China and the U.S. However, Geithner remarked on tax reform toward the end of his speech and was asked about it afterward, ahead of a meeting planned for Friday with corporate CFOs from companies such as Microsoft and Cisco Systems.
“And we must restore fiscal responsibility,” Geithner said during the speech. “This will require the government to spend less and spend more wisely, so that we can afford to make the investments that are critical to future growth. And it will require tax reform that produces a system that is more simple and more fair, that encourages growth and investment, and that will help restore fiscal sustainability.”
After the speech, according to Reuters, he elaborated on the administration’s plans for tax reform. “"We're examining whether we can find political support for a comprehensive tax reform — revenue neutral — but that would improve incentives for investing in the United States,” he said.
Geithner also drew a distinction between the statutory corporate income tax rates of up to 35 percent and corporations’ effective tax rates, which are frequently lower. Many proponents of lowering the corporate tax rate point out that the relatively high statutory corporate tax rate makes the U.S. uncompetitive with other industrialized countries. "Although our effective tax rates for corporates are roughly even, our rates are roughly the average of the other major economies; our statutory rates are much higher," he said.
Geithner, however, noted that corporations might decide where to invest depending on the tax rates in effect. “There are limits [to what] we can do in terms of how we can go about reform without taking .... that into consideration," he said, according to Reuters.
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