Marc Gerson comments on the potential for tax reform this year. "Any reduction in the corporate rate will need to be funded by the repeal of credits and deductions, which will create winners and losers," said Gerson, former majority tax counsel to the House Ways and Means Committee. "The reason is because companies have very different tax profiles. The removal of a particular credit, for example, would have very different impacts on different companies. Some taxpayers utilize a specific credit to a great degree, while others don't use it at all. The question is, what impact will it have on different taxpayers when it is removed?"

Gerson noted the continuing interest in tax reform over the past year. "So much of tax legislation is dedicated to extending things on a temporary basis," Gerson noted. "These include the business extenders, the Bush tax cuts, and the AMT patch. So, over the last couple of years, there has been a recognition that there needs to be a fundamental tax reform effort. And tax reform has been one of the mechanisms that the president has used to reach out to the corporate community this year. An indicator [of the administration's interest in tax reform] will be if the president uses the budget proposal to prioritize or proactively puts forth his own tax reform in the context of the budget," he said "The big picture is that there is strong bipartisan interest in reforming the Tax Code. The question is, does Congress take it upon itself, and does the administration proactively push the debate forward with its own proposal?"