Obama Sets Sights on Tax Code Overhaul Plan

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Congress is working on President Barack Obama's tax deal with the Republicans, but the president has his sights set on a much bigger plan -- a major overhaul of the entire tax code.

The move could make the tax code simpler and bring down tax rates for most Americans.

Though the debate over whether or not to extend the Bush tax cuts remains intense, it appears talk of changes to America's tax system are just getting started.

Obama first signaled his plans on Wednesday when he said, America "has to have tax reform." 

During an interview with National Public Radio, the president talked more about a complete reform of the tax code starting next year -- the kind of overhaul last led by former President Ronald Reagan in 1986.

"So typically, the idea is simplifying the system, hopefully lowering rates, broadening the base," Obama said. "That's something that I think most economists think would help us propel economic growth. But it's a very complicated conversation."

Many conservatives have been calling for an overhaul of the tax code, including making the tax code simpler for businesses as well as individuals.

The New York Times reported the president's economic advisors are already working on a tax code overhaul plan.

Members of both parties seem willing to take part. However, many Republicans and Democrats agree a tax overhaul will almost certainly include some tax hikes in order to reduce the deficit and pay back the nation's debt.

President Obama said America's wealthy citizens must pay more taxes.

"People like myself who have been incredibly blessed and who have a lot more income and wealth can afford to pay more than we currently are paying," Obama said.

"I strongly believe that," he continued. "I believed that during the campaign for president. I believed it when I was campaigning during these midterms. I still believe it."

Meanwhile, on Capitol Hill, the president's compromise with Republicans on extending the Bush tax cuts for all taxpayers appears to be headed toward approval in the U.S. Senate.

A test vote has been scheduled for Monday. Yet, in a symbolic vote in the the U.S. House, the Democratic caucus rejected the bill in its current form.

"If it's take it or leave it, we'll leave it," said Rep. Lloyd Doggett, D-Texas.

Even so, most analysts expect the deal to pass basically in the form the president suggested. However, in the longer run, reforming the whole tax code would be a much bigger issue.

Next year could bring a debate on a plan which eliminates many deductions, but also reduces tax rates.

Tax reduction and reform could be a powerful issue that rides all the way into the 2012 elections.

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Jennifer Wishon

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Jennifer Wishon is the White House correspondent for CBN News based in the network’s Washington, D.C. Bureau.  Before taking over the White House beat, Jennifer covered Capitol Hill and other national news, from the economy to the 2010 oil spill in the Gulf of Mexico.  Follow Jennifer on Twitter @JenniferWishon and "like" her at Facebook.com/JennWishon.