April 11 (Bloomberg) -- The government should raise more revenue through a rewrite of the U.S. tax code, said Senate Finance Committee Chairman Max Baucus, staking out a position that aligns him with President Barack Obama and other Democrats.
Baucus, one of four Democrats who voted against his party’s budget in the Senate, said he’s trying to reach a “middle ground” on a tax-code rewrite that would limit breaks and reduce taxes for families and businesses.
“Some of the revenue raised in tax reform should also be used to reduce the deficit,” Baucus said today at a committee hearing in Washington.
Baucus’s position is central on the tax code because of his position on the Finance Committee and because he is from Montana, a state that Obama lost in November. Baucus, 71, is up for re-election in 2014.
Baucus has been working with Representative Dave Camp of Michigan, the Republican chairman of the House Ways and Means Committee, on tax rewrite efforts. They wrote a joint opinion article in the Wall Street Journal earlier this week expressing some shared principles without discussing whether a tax rewrite should generate fresh revenue.
Camp and other Republicans advocate revenue-neutral changes to the tax code.
Baucus said he opposed the administration’s offer to switch the inflation calculation for Social Security benefits to the slower-growing chained Consumer Price Index.
Slowing the increase in future benefits should be used to shore up Social Security, not for deficit reduction, Baucus said.
“Cutting Montana seniors’ benefits without asking the wealthiest Americans to chip in to the Social Security trust fund isn’t right,” he said.
Baucus said that increasing the cap on wages subject to Social Security payroll tax -- now $113,700 -- would be preferable.
Treasury Secretary Jacob J. Lew, testifying at the hearing, said he would be open to that idea.
Lew emphasized that Obama made the proposal on the inflation formula “in the context of trying to reach a bipartisan agreement” that would include higher taxes and spending cuts.
“We’re doing something hard,” Lew told Texas Republican John Cornyn. “And we know that revenues are going to be hard for you.”
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