US is Too Late For Tax Reforms in 2011

October 19, 2011 Taxation in USA

Barack Obama and Timothy GeithnerWASHINGTON – It is too late for the US to consider an overhaul of its tax system, and all efforts should now be concentrated on finding short term tax measures to boost the economy quickly.

While speaking to the Committee on Small Business and Entrepreneurship of the US Senate on October 18th the Treasury Secretary Timothy Geithner said that the government does not have the time necessary to effectively implement large scale reforms of the US tax system, and any changes to taxation should now specifically concentrate on raising national employment levels and economic growth.

The Secretary was addressing the topic of economic measures and tax reforms currently being debated by the Joint Committee on Deficit Reduction, which is charged with forming a plan to reduce the US government budget deficit by USD 1.2 trillion. The Committee is required to submit its findings and plan by the end of the year, or the US budget will see automatically implemented cuts to military spending and public services funding.

Timothy Geithner said that a general understanding had been reached that the US needs to consider long-term changes to the tax system. However, this task is too large to be taken on by the Committee in the two months left in the year. Instead of focusing on fundamental tax reforms, the Secretary suggested that the Committee implements the tax changes proposed in President Barack Obama’s job program, including an extension to payroll tax cuts and allowing companies to deduct the value of their investments from their tax obligations. During his talk, the Secretary repeated that the implementation of short term tax measures should be seen as “…a bridge to fundamental tax reform, not a substitute.”

Photo by Downing Street