Packwood Suggests Eliminating Tax Loopholes Will Be Considered
WASHINGTON (AP) _ Senate tax law writers from both parties have agreed to focus on cutting the deficit rather than cutting taxes _ even if it means raising taxes for some by closing loopholes, the chairman of the Senate Finance Committee said Monday.
While the House prepares to take up ``Contract With America″ tax cuts totaling $189 billion over five years, both Republicans and Democrats on the Senate panel ``without exception″ want to consider bold deficit-reduction moves, Sen. Bob Packwood told the National Association of Manufacturers.
The deficit-cutting consensus emerged at a weekend retreat of committee members, the Oregon Republican said.
``Without revealing specifics, I think we can say on a bipartisan basis we are willing to step forward and make deficit reduction the first priority, and I think of an immense magnitude beyond what people are thinking possible,″ he said.
After the speech, Packwood told reporters that ``tax expenditures are on the table,″ meaning provisions that benefit a specific group of taxpayers.
His remark was the first prominent mention by a senior Republican this year that cutting the deficit may require raising tax revenues in addition to reducing spending.
The phrase ``tax expenditures″ takes in a wide range of breaks ranging from the deduction for home mortgage interest to very narrow provisions designed to benefit a handful of corporations.
A Republican aide said no decisions have been made on what loopholes need to be closed. Senators at the retreat did not get into specifics on what tax loopholes to eliminate or which spending programs to trim, the aide said.
``They were talking concepts and philosophy during the weekend. They were not talking detailed proposals,″ said the aide, who spoke on condition of anonymity.
In recent months, Labor Secretary Robert Reich has forcefully argued for the elimination of corporate tax breaks, dubbing them corporate welfare.
In his speech, Packwood mentioned the possibility of capping the home mortgage deduction at $250,000 as a means of financing a reduction in the capital gains tax. A capital gains tax cut would primarily benefit upper-income people, but proponents argue that it also would stimulate investment and economic growth.
``If you wanted to pay for it (capital gains), there’s one way you could do it, and that’s the mortgage interest deduction,″ Packwood said. ``I suppose you could use the argument you’re taking it from the rich and giving it to the rich. It’s just a different form of incentive, and the question really becomes: Do you want to have bigger mansions or better machines?″
Packwood conceded that deficit cutting would require politically unpopular decisions.
But, he added, ``I was most encouraged in this ... meeting over the weekend (by) the bipartisan _ without exception _ willingness to take steps greater than anybody is now imagining.″
While the House plans to act on its tax bill by mid-April, Packwood said the Senate bill would probably take shape in July.