Obama Wants 'Conversation' On Tax Code Rewrite

President Obama is trying to use the sudden national attention to tax policy to launch a major rethinking of the tax system — one that could help the economy and even reduce the deficit.

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The congressional battle over tax cuts is just heating up, but President Obama is already looking ahead to next year. That's when he wants to, in his words, start a conversation about a broader rewrite of the tax code. And as NPR's Scott Horsley reports, a bipartisan group of senators is urging him on.

SCOTT HORSLEY: President Obama has talked about his desire to rewrite the nation's tax code several times this week: in a White House news conference, during a photo op with the Polish president and finally during an interview with NPR's MORNING EDITION.

President BARACK OBAMA: Typically the idea is simplifying the system, hopefully lowering rates, broadening the base, that's something that I think most economists think would help us propel economic growth. But it's a very complicated conversation.

HORSLEY: The president has not explicitly linked this idea to the more immediate argument over extending Bush-era tax cuts, but a bipartisan group of senators wants to do just that.

Virginia Democrat Mark Warner has been talking with about 20 of his colleagues, both Democrats and Republicans. They want to include a call for tax reform and deficit reduction when the Senate considers the president's tax cut compromise next week.

Senator MARK WARNER (Democrat, Virginia): We've got to demonstrate as the Congress that we can walk and chew gum at the same time. There's a lot of members that, while they may end up supporting the president's compromise, also feel that here's a good time to indicate that next year we are going to come back and take up the really hard task of tax reform and deficit reduction.

HORSLEY: Warner says lawmakers should do more than just talk about tax reform, they should actually vote on a plan next year.

Sen. WARNER: Well, I don't think we have the luxury of waiting. Punting this issue into the 2012 presidential debate may be a recipe for inaction.

HORSLEY: For now at least the president is not setting such an aggressive timeline, noting that past efforts at tax reform have generally taken a long time.

Pres. OBAMA: What I believe is that we've got to start that conversation next year. I think we can get some broad bipartisan agreement that it needs to be done. But it's going to require a lot of hard work to actually make it happen.

HORSLEY: The last big tax overhaul took place a quarter century ago after several years of legislative groundwork. Former New Jersey Senator Bill Bradley was a key player in that effort. He and his colleagues eventually succeeded in meeting Democrats' demands to eliminate tax loopholes and Republican calls for lower tax rates.

Mr. BILL BRADLEY (Former Senator; Democrat, New Jersey): And the result is I think you get overall fairness, simplicity and efficiency in the system.

HORSLEY: Since that last big housecleaning, lawmakers have made thousands of changes to the tax code, adding new loopholes in deductions that cost the government close to a trillion dollars a year. Meanwhile, tax rates have gone up again.

Still, Bradley says the '86 overhaul shows it's possible to weed out tax breaks and achieve a simpler, better tax code.

Mr. BRADLEY: Sometimes legislators can surprise the public by doing something that the pundits thought was never possible.

HORSLEY: That '86 rewrite took place when one party controlled the White House and Senate and the other party ran the House. That will be the case again starting next month.

Scott Horsley, NPR News, the White House.

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