Debt panel debates corporate tax rates

WASHINGTON -- There was some agreement on the congressional "supercommittee" Thursday that the deficit-reduction package should include some kind of tax reform — especially on corporate taxes.

How much agreement? At one point, Sen. Pat Toomey, R-Pa., agreed with Sen. John Kerry, D-Mass., who agreed with Sen. Rob Portman, R-Ohio, who agreed with Sen. Max Baucus, D-Mont.

What they agreed on was this: that the Joint Select Committee on Deficit Reduction has the mandate and the procedural advantages that give it an opportunity to simplify the corporate tax code, reduce rates and create jobs.

That's where the agreement ended.

Congress has asked the committee to come up with a deficit-reduction plan worth $1.5 trillion by Nov. 23.

Baucus, the chairman of the Senate Finance Committee, said he's all for closing corporate tax breaks and lowering rates. But he said changes would have to be phased in carefully to avoid hurting industries that have come to rely on provisions in the tax code.

"Nobody likes to pick winners and losers here, but it may be that some of these industries do provide more jobs than some others, and I think it's important that we know what they are," he said.

Portman said many CEOs have come to believe that lower rates are a "better deal" than tax preferences.

"We don't collect as much revenue as we should due in part to the complex, inefficient and loophole-ridden tax code we've got," Portman said. He argued a simpler system would grow the economy: Companies would have more income available to be taxed.

Republicans pressed Tom Barthold, chief of staff of the Joint Committee on Taxation, to give better estimates of how much more tax revenue would be created by economic growth, so they could "score" it in the supercommittee's proposal.

"People are going to look at the score. How much of a 10-year savings have we achieved? Did we meet our goal of $1.5 (trillion)?" Sen. Jon Kyl, R-Ariz., said.

Rep. Xavier Becerra, D-Calif., suggested that Republicans were asking Barthold to "predict the weather."

Bill Frenzel, a retired GOP congressman from Minnesota who's now an independent budget watcher, said corporate tax reform may be an easier sell politically than individual tax reform, which could impact small businesses. But he said corporate interests would fight to save their tax preferences.

"They've got a couple of months, and tax reform is a very, very complicated problem," he said. "It's going to be very difficult just to get the legislation drafted, to say nothing of figuring out what goes into that legislative package."

Frenzel said the committee can't avoid taxes entirely. "The stakes are too high. They have to do something."