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STEVE INSKEEP, host:

It's MORNING EDITION, from NPR News. I'm Steve Inskeep.

RENEE MONTAGNE, host:

And I'm Renee Montagne.

President Obama plans to push for an overhaul of the federal tax code next year. In an interview with NPR, the president is talking of lowering tax rates and eliminating tax loopholes.

INSKEEP: He raises that possibility even as he works to save a tax deal he made with Republicans.

President BARACK OBAMA: The bottom line is for everybody to act responsibly.

MONTAGNE: The president infuriated Democrats when he agreed to extend President Bush's tax cuts for the wealthy for two more years. It was part of a larger tax deal.

INSKEEP: In our conversation, the president predicted his plan will pass, anyway. He's also been suggesting that the much-criticized tax compromise could be left behind in 2011, as we discussed in the Oval Office.

Because this plan projects extending the Bush tax cuts for two years, it's been widely presumed that in two years or less, you're going to have another big fight over whether to extend these tax cuts.

This week, my colleague Scott Horsley asked you if there was a different possibility here. He asked if you were going to use this two-year window to push for a broader overhaul of the tax code. You said yes. I want you to expand on that yes.

What do you plan to do to the tax code in the next couple of years?

Pres. OBAMA: Well, I think we're going to have to have a conversation over the next year. And if you think about the last time we reformed our tax system, back in 1986 - it didn't happen right away, by the way. It required a lot of conversations among a lot of different parties.

But people of good will came together and realized that if we eliminate what happens to the tax code every decade or so, loopholes get built in, special interest provisions get built in, the nominal rates end up high. But the actual tax rates that well-connected folks or people who have good accountants pay end up being a lot lower. Ordinary people end up getting squeezed.

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

So what I believe is, is that we've got to start that conversation next year. I think we can get some broad bipartisan agreement that it needs to be done. But it's going to require a lot of hard work to actually make it happen.

INSKEEP: So that everybody understands what you're talking about, your deficit commission talked about lowering everybody's tax rate and eliminating deductions, such as changing the home mortgage deduction and many other deductions, as well. That's the kind of plan you're talking about.

Pres. OBAMA: Well, I have not specifically endorsed that plan. What I'm saying is, is that the general concept of simplifying - eliminating loopholes, eliminating deductions, eliminating exemptions in certain categories - might make sense if, in exchange, people's rates are lower. That may end up being a more efficient way of doing business.

INSKEEP: Does that completely change this debate over the Bush tax cuts? Everything goes away. The tax code is just completely different than it was before.

Pres. OBAMA: Here's one thing that I don't think will change. And that is that 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. I strongly believe that. I believed that during the campaign for president. I believed it when I was campaigning during these midterms. I still believe it.

And so the fight about what the top one percent or two percent of America should be contributing, as part of our contribution to rebuilding America and putting it on a competitive footing, that basic principle is one that I continue to believe in and I will be fighting for over the next two years.

INSKEEP: That's President Barack Obama, in the Oval Office.

We have more of the president's views on taxes and the economy elsewhere in today's program and at npr.org.

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