Business Taxation

The focus on lower rates and fewer tax breaks still governs the administration’s approach to the business side of the U.S. tax code, an area where Obama said he thinks he can reach a deal with the Republicans who control Congress.

“While our views on individual tax reform may be far apart, there is a broad set of business tax reforms on which we should be able to agree,” Treasury Secretary Jacob J. Lew said Wednesday at a speech in Washington.

The Democrats’ approach to tax policy for individuals comes after more than a decade in which the expiring rate cuts enacted under former President George W. Bush dominated the party’s agenda on taxes. Obama campaigned on ending those cuts for the highest-earning Americans -- and it took two presidential elections and a last-minute deal for him to get that in January 2013.

In the early years of Obama’s administration, even without making a proposal of their own, officials were more open to a tax revamp that would have lowered marginal rates, said David Kamin, a White House tax-policy adviser in Obama’s first term.

Budget Talks

That concept was part of the unsuccessful talks Obama had with House Speaker John Boehner about a big budget deal in 2011. The last two Democratic chairmen of the Senate Finance Committee -- Max Baucus and Ron Wyden -- favored cutting marginal rates for individuals as part of a tax agreement.

That strategy has changed for a few reasons, among them many Democrats’ reluctance to give up the victory they won in restoring the top marginal tax rate to 39.6 percent.

There’s also the math.

In 2012, Republican presidential candidate Mitt Romney had trouble making the arithmetic add up on his call for deep individual rate cuts without increasing the budget deficit or shifting the tax burden to the middle class.

Last year, Dave Camp, then-chairman of the House Ways and Means Committee, proposed a plan that required major changes to some of the most popular deductions -- for mortgage interest, charitable contributions and state taxes -- and was only able to get the top tax rate down to 35 percent from 39.6 percent.

The administration became less interested in an individual tax revamp in that mode, even as part of a bigger deal.