While being forced to talk more about his own taxes than the nation’s, Timothy Geithner, President Obama’s nominee for Secretary of the Treasury, told the Senate Finance Committee at his confirmation hearing this morning that the new administration is committed to overhauling the entire corporate tax system.
“The President believes we have substantial opportunities for reform of the entire corporate tax system,” Geithner said in response to a question by Sen. Orrin Hatch, a Utah Republican, who asserted that the U.S. corporate income tax rate is the “highest in the world” and that it “hinders competitiveness.”
Hatch asked Geithner, the president of the New York Federal Reserve, whether corporate taxes should be reduced without offsets or reduced according to a plan put forward by Rep. Charles Rangel, a New York City Democrat, to reduce corporate taxes but offset them by eliminating the tax credit for research and development.
The nominee replied that while “we have to look at entire framework of the tax code…the president is committed to making the R&D tax credit permanent.” Hatch also asked him whether the Obama administration was prepared to tackle the issue of cutting such “entitlement” programs as Social Security, Medicare, and Medicaid. Replied Geithner: To help establish credibility that the U.S. will eventually pay down its current $1.2 trillion deficit (a Congressional Budget Office estimate), the administration will “take on entitlement reform.”
But Geithner was more at pains to explain his reported failure to pay more than more than $34,000 in taxes for Social Security and Medicare taxes while working at the International Monetary Fund from 2001 to 2003, as well as a small payment in 2004 after he left. Under fire from questioning by Republican Senators, Geithner said “these were careless mistakes, they were avoidable mistakes but they were completely unintentional.”
Geithner reported that when he left a post in the U.S. Treasury Department in 2001, he worked briefly at the Council of Foreign Relations and then joined the International Monetary Fund. In that year, he thus had to report taxes on three employers, including a self-employment arrangement under the IMF. Although, as he acknowledged, the IMF provided him with adequate disclosure, “I believed mistakenly that I can file as an employee,” and once he made that first mistake, he continued to make it in the remaining years.