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Boehner urges debt committee to tackle taxes

The top U.S. Republican calls on a special congressional committee to consider tax reform that would close loopholes but not raise rates as part of its bid to cut the deficit.
/ Source: Reuters

The top Republican in Congress Thursday dismissed President Barack Obama's jobs-creation package as a "poor substitute" for policies that would boost the economy and ruled out tax increases as a way to close the country's budget gap.

House Speaker John Boehner, in high-profile speech, called on a special congressional "super committee" to consider tax reforms that would close loopholes but not raise rates —or tax revenues —as part of its bid to cut the U.S. deficit.

Boehner's address to the Economic Club of Washington was a comprehensive statement of Republican economic principles as Congress works to bring down the stubbornly high 9.1 percent unemployment rate and tame the national debt.

Republicans already have said they do not support many elements of Obama's $447 billion jobs package and will not back the tax increases he has proposed to pay for it.

Boehner's comments indicated the bill is unlikely to emerge from Congress in anything like its current form.

Even as Boehner said there were some opportunities for common ground, he indirectly criticized the temporary tax breaks that other senior Republicans had said they might support.

Boehner attacked "short-term gimmicks" and said a proposed tax credit for businesses that hire new workers would have little impact if employers were worried about other government policies. Washington's energies would be better channeled toward reducing regulations on business, he said.

"Let's be honest with ourselves. The president's proposals are a poor substitute for the pro-growth policies that are needed to remove barriers to job creation in America," Boehner said.

Boehner said the newly created "super committee" of congressional Democrats and Republicans should try to simplify the tax code in order to trim at least $1.2 trillion from annual budget deficits over 10 years.

But that overhaul should not bring more revenue to the government and the committee should focus only on spending cuts and benefit reforms to trim deficits, Boehner said.

The overhaul should yield a top rate of 25 percent for both income and personal taxes, Boehner said later on CNBC, down from their current level of 35 percent.

Tight Deadline
The committee must finish its work by Nov. 23 and many budget experts say it would be hard pressed to finish a comprehensive rewrite of the tax code by then. But the panel could lay out the broad outlines of tax reform and instruct other lawmakers to fill in the details at a later date.

Republicans and Democrats broadly agree on the need to eliminate some of the loopholes and exemptions that cost the government about $1 trillion in lost revenue each year.

But they disagree about the details -- particularly how much the tax system would raise in revenue, and what the top income-tax rate should be.

In negotiations earlier this summer, Boehner proposed an overhaul that would raise about $36.2 trillion over 10 years —about $800 billion more than if temporary tax breaks, including the income-tax cuts put in place under President George W. Bush, were kept in place.

Allowing those tax breaks to expire would raise about $3.9 trillion.

During the negotiations, Boehner aides said the extra revenue would come not from higher rates but from a healthier economy operating under a more efficient tax code.

"The Joint Select Committee has a huge opportunity," Boehner said of the deficit-cutting panel. "It has a chance to lay the foundation for economic growth by dealing with some of the obstacles that are standing in the way."