WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner said on Tuesday the country’s tax code was riddled with special preferences but it was not possible to fix the system before the end of the year.
A select group of lawmakers are grappling with how to find at least $1.2 trillion in savings over the next decade. Although there is pressure on the six Democrats and six Republicans to fix the tax code, Geithner said it was not possible to do so by a November deadline.
“We are not going to do fundamental tax reform in two months,” Geithner told the Senate Small Business Committee. Geithner pointed to tax benefits for small businesses that are part of the Obama administration’s $447 billion jobs program.
Those include an extension of the employee payroll tax holiday and allowing companies to deduct the value of their new investments from their tax obligations.
“This is a bridge to fundamental tax reform not a substitute,” he said. Senate Republicans have already blocked the overall bill, forcing the administration and Senate Democrats to consider pushing parts of the bill through Congress.
Geithner urged Congress to support specific provisions in the proposal. He said that small U.S. businesses still face a very tough economy and are experiencing more challenges than larger businesses after the recession.
“The biggest problem facing the economy today... if you look at what businesses say today, their overwhelming challenge is they don’t see enough growth and demand for their products,” he said.
The congressional deficit reduction panel has until November 23 to reach an agreement to curb federal spending. If lawmakers fail to do so, automatic budget cuts will be triggered starting in 2013 that would cut funding across the board.
Reporting by Rachelle Younglai, Jason Lange, Glenn Somerville; Editing by Neil Stempleman and Andrew Hay