U.S. Department of Treasury Secretary Timothy Geithner defended President Barack Obama’s tax reform plan as a part of his 2013 fiscal year budget Tuesday during a hearing before the Senate Finance Committee.
Mr. Obama faced harsh criticism from congressional Republicans after unveiling his budget Monday, which features a call for $1.4 trillion in revenue to be claimed from tax increases on the wealthiest taxpayers in the U.S.
U.S. Sen. Orrin Hatch, a ranking Utah Republican on the Senate Finance Committee slammed Mr. Obama’s “European style” budget Tuesday during the hearing.
“This budget is a plan for a permanently larger, European- style government,” said Mr. Hatch. “It does not set our country on a sustainable fiscal path.”
The president’s $3.8 trillion budget proposes more domestic spending on programs aimed at spurring job creation, such as a program aimed at building partnerships between businesses and community colleges to get more college students trained for job fields that are currently in high demand.
Although Republicans have stated that the president’s budget unfairly raises taxes on wealthy taxpayers, according to Mr. Geithner it would only raise taxes on two percent of the wealthiest taxpayers in the U.S.
Republican presidential candidate Mitt Romney called the president’s budget proposal an “insult to the American taxpayer.”
The Treasury secretary also noted that the “modest” increases on the nation’s wealthy would be more effective providing more tax cuts for the wealthiest taxpayers.
“We think the economics are quite good, quite sound,” said Mr. Geithner during his hearing Tuesday.
Corporate Tax reform
During the committee hearing Tuesday, Mr. Geithner stated that the Obama administration will be unveiling a plan later this month that proposes changes to the corporate tax code in the U.S. in order to make American businesses more competitive abroad and bring more jobs and small businesses to the U.S.
“We’ll be more specific than principles but not as detailed as legislative language,” said Mr. Geithner Tuesday.
U.S. Rep. Dave Camp, a Michigan Republican, is calling for the corporate tax rate to be lowered from 35 to 25 percent, BusinessWeek reports.
That would be similar to the tax reform plan that is being presented by Mr. Romney.
In contrast, former House Speaker Newt Gingrich’s tax reform plan is calling for the corporate tax rate to be lowered to 12.5 percent. Mr. Gingrich has also been critical of the president’s 2013 budget proposal.
The president also called for corporate tax reform during his State of the Union speech last month.
Members of both chambers of Congress have the option of ignoring the president’s proposed budget.
House Speaker John Boehner, an Ohio Republican, slammed the president’s proposed budget Monday stating that it represents more of the president’s past “failed policies.”
Mr. Geithner is prepared to continue to defend the president’s proposed budget and released a press release Monday in support of it as well.
