WASHINGTON, Feb. 16 (UPI) -- U.S. Treasury Secretary Timothy Geithner appears before Congress Wednesday after saying Washington should cut the corporate tax rate by more than 5 percent.
"We are very serious ... in trying to build consensus now on a set of fundamental changes to the corporate tax system that would improve incentives for investment," Geithner told the House Ways and Means Committee Tuesday.
While the official U.S. corporate tax rate is 35 percent, one of the world's highest, "the average rate of our major trading partners now is in the high 20s," Geithner said. "And to make a meaningful difference, you want to get it down substantially toward that level."
Some companies pay much less than the official rate, but the high official rate still scares off investment, The Wall Street Journal said.
White House Budget Director Jack Lew echoed Geithner's remarks, telling a Senate Budget Committee hearing Tuesday corporate tax reform was "critical to our economic future and to our competitiveness."
Geithner, who will testify Wednesday before the Senate Finance Committee at 10 a.m. EST and the House Budget Committee at 2 p.m., told the Ways and Means Committee entitlements must be revamped to rein in the national debt.
"We cannot pretend that our budget problems are merely the result of the financial crisis, nor can we pretend that we can restore fiscal responsibility without real sacrifice that affects all Americans," Geithner said.
President Barack Obama's $3.7 trillion budget cuts non-discretionary spending to its lowest level as a share of the economy since the administration of 1950s Republican President Dwight Eisenhower, Geithner said.
Ways and Means Chairman Dave Camp, R-Mich., called Obama's budget a "missed opportunity" that "fails to address entitlement reform or tax reform" in the face of a record $1.6 trillion deficit for the current fiscal year.
Republicans do not, so far, address entitlements in their own proposals to cut spending in the final seven months of the current fiscal year, the Journal said.
The White House proposed more than $1 trillion in deficit reductions over 10 years, with three-quarters coming from spending cuts and the rest from tax increases or the elimination of existing tax breaks.
Proposed tax changes include letting income and capital-gains taxes rise after 2012 for people earning more than $200,000 a year and married couples making more than $250,000. The White House would also reform corporate taxes to end special-interest tax breaks, with the intention of using the added revenue to lower overall tax rates.
Ranking Senate Finance Committee member Sen. Orrin Hatch, R-Utah, who will question Geithner Wednesday, said in a statement Obama's budget "hits almost every sector of our economy with a tax hike -- energy taxes, taxes on hiring, higher income taxes."
Geithner told the House committee the budget includes tax incentives intended to encourage investment and innovation.
Obama said Tuesday he was also ready to work "in a serious way" with Republicans on making changes to Medicare, Medicaid and Social Security.
But the administration will "reject plans that slash benefits, that fail to protect current retirees -- people with disabilities and the most vulnerable -- or that subject Americans' retirement savings to the whims of the stock market," Geithner testified.