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A baby step toward tax reform

By Kay Bell · Bankrate.com
Tuesday, January 22, 2013
Posted: 4 pm ET

Did you catch President Barack Obama's call for tax reform in his second inauguration speech Monday?

If you didn't, don't feel bad. It was a quick hit.

The one specific mention of tax reform came early in the speech, about seven minutes into Obama's 18-or-so-minute address:

"We understand that outworn programs are inadequate to the needs of our time. So we must harness new ideas and technology to remake our government, revamp our tax code, reform our schools, and empower our citizens with the skills they need to work harder, learn more, reach higher."

But the president set the tax table just moments earlier, telling the National Mall crowd that "we, the people, understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it. We believe that America's prosperity must rest upon the broad shoulders of a rising middle class."

That's the same "fair share" message Obama has delivered since his 2008 (and before) campaign days. We heard it during the "fiscal cliff" debate, where the president finally attained his goal of a top tax rate of 39.6 percent on Americans who earn the most, albeit at a higher income threshold than he wanted.

It's no real surprise that Obama didn't dwell on tax reform during his second inaugural address. As the old saying goes, it was neither the time nor place for such specifics. But he at least cracked the door in his first public appearance of his second term.

Expect more tax details in the president's annual budget proposal, which should be released in late February or early March.

And Senate Democrats vow to pass a budget in 2013. If they do, it will be the first time for such a financial document in more than three years.

House Speaker John Boehner (R-Ohio) would like to see that budget from the other side of Capitol Hill before any debt ceiling agreement is reached.

These crucial financial discussions are not by any stretch of the imagination tax reform. And there still are a lot of political hurdles to overcome before the House and Senate can get down to tax reform nuts and bolts.

But all are crucial steps to get lawmakers talking about taxes.

Given the divisiveness these last four years in Washington, D.C., such legislative baby steps are important.

The president acknowledged at the traditional post-swearing-in luncheon that there is much work ahead for him and Congress. Obama told the bipartisan gathering that he recognizes the "profound differences in this room … but regardless of political persuasions and perspectives" all serve because they believe they can make a better America for future generations.

Now we wait to see if they can make a better tax code for the country.

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1 Comment
mike klock
January 23, 2013 at 10:00 am

As a retired tax preparer I say let’s go to a flat tax. Everyone pays their fair share. Congress won't even consider it. Why, seems logical, the rich would have their income tax bracket cut by 2/3 rds. & the lowest brackets cut in half... In reality they would end up paying several times as much in taxes as they pay now. All income taxed at the same rates, no tax deductions for anyone except business expenses.