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Geithner talks (a little) about taxes

During an economic conference last week in New York City, Treasury Secretary Timothy Geithner offered a few tax tidbits.

Geithner_Buttonwood_Economist magazine In response to a question about a potential securities transaction tax, Tax Analysts' Lee Sheppard reports that Geithner acknowledged that he "hadn't seen a version of the tax that'd make much sense."

That should calm the nerves of those who freaked out earlier this year when talk of a transaction tax was revived. Also referred to as the Tobin Tax after James Tobin, the late American economist and Nobel laureate who first suggested a securities transfer tax in 1972 as a way to discourage currency speculation and penalize short-term trading, the concept has been gaining support as a way to pay for projects and avoid adding to the federal deficit.

Transaction tax advocates say it could raise between $50 billion and $100 billion per year. Opponents counter that not only is such a tax unworkable, but if enacted, investors would simply find other avenues for their money, resulting in devastating job and tax losses.

As for the stimulus plan, the Treasury head said the Obama Administration must be careful not to withdraw economic stimulus programs too quickly. However, Geithner insisted that the White House isn't yet contemplating a second economic stimulus program. (The Administration, in throwing its support last week to a new round of $250 rebate checks for retirees, was careful not to call this possible payout a second stimulus.)

Asked about the prospects for tax reform, Sheppard reports that Geithner dodged the question and indicated that it would be far down the line. Economic growth and public confidence about the economy's future take precedence, he said, followed by deficit reduction, which would require tough political choices.

With those items before it on the policy to-do list, it's probably safe to say that Obama's stab at tax reform is going to suffer the same sad fate as did Dubya's tax revamp effort.

For more on The Buttonwood financial conference, underwritten by The Economist and held at Pace University, check out coverage by the sponsoring magazine, MarketWatch, Reuters and the Wall Street Journal/Dow Jones Newswires.

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How can we get tax reform higher up on the list? And how is it that the constant political shenanigans do not drive all my fellow tax professionals crazy?

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