Reinvent ‘Monstrous’ Tax Code: Ex-Treasury Secretary O’Neill

Fiscal Cliff
Steve McAlister | Photodisc | Getty Images
Fiscal Cliff

The U.S. economy needs a simplified and more “progressive” tax code that would abolish income and corporate taxes, while bringing in enough revenues to pay for the government’s obligations, former Treasury Secretary Paul O’Neill told CNBC’s “Squawk Box” on Friday.

“Our tax code proves we are not an intelligent people because no intelligent people would have invented this thing,” said O’Neill, who called the current tax system, often criticized as bloated and cumbersome, a “monstrosity.”

In the context of the overall debate about fiscal reform, O’Neill called for a "progressive...value-added tax" that could help boost economic activity by substituting for corporate, payroll, and individual income taxes.

O’Neill, who was unceremoniously drummed outof his job as Treasury Secretary under former president George W. Bush, described himself as unenthusiastic about either of the major contenders for the presidency.

The former head of Alcoasaid he would “like to” support the budget proposals of either President Barack Obama or his Republican challenger, Mitt Romney.

However, he said that “none of the plans on the table would get us a balanced budget again until 2040. I would like there to be a balanced budget in my lifetime.”