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Tax officials cite momentum, challenges in tax revamp

By Kim Dixon

WASHINGTON (Reuters) - Two U.S. policymakers from opposite ends of the political spectrum on Friday said momentum is building for a top-to-bottom revamp of the tax code, but the biggest question is whether there is political will to get it done.

Mark Mazur, assistant secretary for tax policy at the Treasury Department, and Mark Prater, a long-time Republican Senate tax counsel, cited major policy proposals and two years of public hearings and private meetings that have set the groundwork for the first rewrite of the code since 1986.

"This year the stars are aligned for tax reform in a way they haven't been," said Mazur, who is Treasury Secretary Jack Lew's top policy aide on tax issues. He and Prater spoke at a legal conference in Washington.

"Now, it is just a matter of political will," Mazur said.

The two top tax-writing lawmakers hope to push legislation through Congress this year to lower most tax rates and simplify the code that many Americans regard as far too complex.

They may have more political freedom to write a bill as Senate Finance Committee Chairman Max Baucus, a Democrat, is retiring after this term, and House of Representatives Ways and Means Committee Chairman Dave Camp, a Republican, is term-limited as chairman.

President Barack Obama says he backs tax reform, although some have said it does not appear to be high on his agenda.

Mazur conceded there are "tons of obstacles," including the divide between the parties on whether the tax reforms should produce more revenue. Democrats generally favor doing this, while Republicans do not.

Still, Prater, a tax policy aide to Senator Orrin Hatch, the senior Finance Committee Republican, agreed momentum is building. One advantage he cited is the January 1 fiscal deal that raised taxes on Americans making more than $400,000 a year and also established a budget baseline both parties agree on.

"The playing field is a lot clearer about where we are starting from," Prater said.

On the question of whether a tax overhaul should raise revenue, he said: "That to me is really a political question that comes down to what the other pieces of the picture are."

(Reporting by Kim Dixon; Editing by Kevin Drawbaugh and Vicki Allen)

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