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Obama's Fiscal Cliff Proposals Unacceptable To GOP
Source:
tax-news.com
- Dec 3, 2012
By Mike Godfrey, Tax-News.com, Washington
03 December 2012
United States House of Representatives Speaker John Boehner (R – Ohio) called President Barack Obama’s first proposal, involving both increased tax revenue and spending cuts to resolve the problems represented by the impending "fiscal cliff," as "not serious" and confirmed that little progress has yet been made.
It is recognized on all sides that, not only will a decision need to be taken by the end of this year on the more than USD600bn of tax increases and automatic spending cuts that are set to kick in on January next year if Congress takes no action, but also that a start should be made to reducing the US fiscal deficit.
While it is generally becoming accepted that the solution will contain elements of both the reduced spending wanted by Republicans and the increased tax revenue favored by Democrats, discussions appear, at the moment, to be revolving around finding a compromise that would increase revenue without the Bush tax rate hikes for taxpayers earning over USD250,000 that President Obama insists on, but Republicans adamantly oppose.
However, it was reported that the first compromise offer from the Administration, which was presented to Boehner on November 29 by Timothy Geithner, the Treasury Secretary, involved a plan to raise USD1.6 trillion of revenue (including USD1 trillion from high-income taxpayers), and only USD400bn in savings from Medicare and other social programs, over 10 years. The latter would be worked out next year, with no guarantees of success, while they could also be offset by other spending increases, including an extension of unemployment insurance.
The Democrat-led Senate already has an approved bill ready to send to the House, which would extend the Bush tax rate cuts, except for taxpayers earning over USD250,000, but the President also appears to want dividends earned by higher income individuals to be taxed as ordinary income and for the estate tax rate to be raised to a higher level on smaller inheritances than at present.
Republicans were undoubtedly disappointed with what, to them, represented a step back from trying to achieve a consensus. The Ranking Member of the Senate Finance Committee Orrin Hatch (R – Utah), giving the Republican weekly address on December 1, said that "the President has said he wants a so-called balanced approach to solve this crisis. But what he proposed this week was a classic bait and switch on the American people - a tax increase double the size of what he campaigned on, billions of dollars in new stimulus spending."
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Category: General Business
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