Bush admin won’t rush tax reform: Snow

WASHINGTON (Reuters) – The Bush administration will not
hurry the process of overhauling its tax code and is taking a
careful look at proposals from a presidentially appointed
panel, U.S. Treasury Secretary John Snow said on Thursday.

In remarks to the National Association of
Wholesaler-Distributors’ Executive Summit in Washington, Snow
also repeated a call for Congress to make U.S. President George
W. Bush’s tax cuts permanent.

“According to our own Treasury estimates, the lower tax
rate on dividends and capital gains will ultimately increase
national output by $35 billion,” he said.

In a speech running through many of the economic points
raised in Bush’s State of the Union address on Tuesday, Snow
praised the economy’s strength and said U.S. businesses have
good reason for optimism, citing growth in payrolls and
productivity, and low core inflation.

“We are, right now, likely witnessing the tipping point on
wages — when incomes rise for workers and businesses combined,
but workers once again increase their incomes faster than
businesses,” Snow said.

Earlier on Thursday, the Labor Department said nonfarm
business productivity fell at a 0.6 percent annual rate in the
fourth quarter, the first decline since the first quarter of
2001. That pushed unit labor costs up at a 3.5 percent pace —
the fastest in a year and well above market expectations.

Employers had capitalized on strong productivity growth in
recent years to keep costs low even while raising output.
Economists said the fourth-quarter numbers may mean businesses
have squeezed as much out of their workforce as possible.

The productivity numbers on Thursday fanned fears of faster
inflation, and pulled stock markets lower.

In his speech, Snow said tax receipts were running strong.

He expressed sympathy for businesses that had to spend
money and time contending with an unwieldy tax code but said
the administration would not rush into adopting reforms.

“We only get the chance to reform the code every twenty
years or so, so we’ve got to make sure it’s done right,” he
added.

Many think such polarizing issues as tax reform may wait
until after November’s congressional elections. Administration
officials have said they want to introduce proposals that have
a good chance of being accepted by Congress.