Next US Tax Reform Package To Focus On Business

by Mike Godfrey, Tax-News.com, Washington

25 July 2001

According to media reports, President Bush's administration is designing a further package of tax reforms this time targeted at investors and the private business sector involving capital gains tax, corporate alternative minimum tax and depreciation issues. The new tax reforms will be a follow-up to the US$1.35 trillion tax cuts (due to be implemented over ten years) that were mainly centered around individual taxes.

Glenn Hubbard, chairman of President Bush's council of economic advisers confirmed earlier this week that the government is in the first stages of a review of corporate taxes, but he refused to answer questions over whether or not the US tax code would be reformed at the same time. Hubbard stated: 'We are in the early stages of looking at a general discussion of tax reform. Nothing in particular has been ruled in. But I can tell you what has been ruled out, any proposal that is raising the tax burden or raising marginal tax rates is a non-starter.'

It is likely that any changes will be implemented on an incremental basis, although Hubbard said 'many times, a discussion of tax reform has been my way or the highway, I would argue ... we get there whatever way we can.' When questioned over the time-scale for another package of tax reforms, Hubbard said it would most likely be in the 'medium-term.'

House Majority Dick Armey argued that the tax code can not merely be 'tinkered' with, it should be restructured in order to tackle the increasing problems of its complexity. A tax overhaul, he asserted, should dictate that a completely new tax system be introduced. 'You've got to make it an all or nothing proposition ... not bits and pieces,' he said.

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