Obama, Boehner Revisit Renewal Of Tax Cuts

by Mike Godfrey, Tax-News.com, Hong Kong

09 November 2010

During his weekly address, the United States President Obama called on both Democrat and Republican parties to work together and concentrate on the areas where both sides can agree, as Congress prepares to focus on taxes when it returns to work later this month.

The main point of contention between the two sides in this intervening period, after the recent mid-term elections and before the new Congress begins in January, is whether it will be possible to extend some or all of the tax cuts enacted under the presidency of George W. Bush and which are due to expire at the end of this year.

While Republicans have proposed extending the tax cuts in their entirety, President Obama confirmed in his address that his priority remains that Congress should only “permanently extend the Bush tax cuts for all families making less than USD250,000 a year. That’s 98% of the American people.”

He recognized the need for both sides to work together and compromise, but added that he did not see how the US “can afford to borrow an additional USD700bn from other countries to make all the Bush tax cuts permanent, even for the wealthiest 2% of Americans. We’d be digging ourselves into an even deeper fiscal hole.”

At the same time, the Republican leader in the House of Representatives, John Boehner, replying to the announcement of an unchanged US unemployment rate, reiterated that the “stagnant and stubbornly high unemployment makes clear why permanently stopping all the looming tax hikes should top Washington’s to-do list this month.”

Boehner said that “stopping these tax hikes – and cutting spending to pre-stimulus, pre-bailout levels – would help eliminate the uncertainty gripping small businesses”. In a subsequent interview, he confirmed that the Republican party saw the election results as making it “clear the American people want us to ‘stop all the tax hikes and cut spending’, which is exactly what Republicans have proposed.”

Another chink of light, providing what, it is hoped, will become the subject of negotiation between the two sides, appeared during a White House press briefing by Press Secretary Robert Gibbs, when a possible compromise in extending the tax cuts for incomes of above USD250,000 for one or two years was not denied.

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