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Bipartisan Tax Talks Yield Few Results

by Mike Godfrey, Tax-News.com, Washington

02 December 2010


No decisions were taken at the planned meeting between President Barack Obama and leading Republicans and Democrats from the United States Congress to discuss the possibility of common ground, particularly over the expiring Bush tax cuts.

During this lame duck session of Congress, the main point of contention between the President and the Republican party, which regained control of the House of Representatives earlier this month in the mid-term elections, is whether it will be possible to extend some or all of the individual tax cuts enacted under the presidency of George W. Bush, which are due to expire at the end of this year.

While Republicans have proposed extending the tax cuts in their entirety, since they believe that nobody, and particularly small business owners, should be subject to higher taxes as the pace of the economic recovery is still uncertain, both President Obama and the Democrats have insisted that Congress should only extend the Bush tax cuts for those taxpayers making less than USD250,000 a year, due to the high fiscal cost entailed in their extension for those earning above that amount.

After the meeting, in a statement, President Obama confirmed that he “thought it was a productive meeting,” and that “people came to it with a spirit of trying to work together.” With regard to the Bush tax cuts, he reported that there was “broad agreement that we need to work to get that resolved before the end of the year,” but that there were still “differences about how to get there.”

“Having said that,” he said, “we agreed that there must be some sensible common ground. So I appointed my Treasury Secretary, Tim Geithner, and my budget director, Jack Lew, to work with representatives of both parties to break through this logjam. I’ve asked the leaders to appoint members to help in this negotiation process.”

“That process is beginning right away and we expect to get some answers back over the next couple of days about how we can accomplish our key goal, which is to make sure the economy continues to grow and we are putting people back to work,” he added. “And we also want to make sure that we're giving the middle class the peace of mind of knowing that their taxes will not be raised come January 1.”

He also disclosed that he had “urged both parties to move quickly to preserve a number of other tax breaks for individuals and businesses that are helping our recovery right now and that are set to expire at the end of the year." This includes a tax credit for college tuition, as well as a tax cut for businesses that hire unemployed workers.

In a statement following the meeting, the House of Representatives Republican Speaker-designate John Boehner did not appear to be yielding much. He said it was “encouraging to see President Obama acknowledge that the American people want us to focus on creating jobs and cutting spending, but now it’s time to act. If President Obama and Democratic leaders come up with a plan in the lame-duck session to cut spending and stop all the tax hikes, they can expect a positive response from Republicans. If the lame-duck Congress is unable or unwilling to act, the new House majority will in January.”

Boehner also noted that President Obama had asked congressional leaders of both parties to select lawmakers to meet with Administration officials regarding the expiring tax cuts. He added: “We appreciate President Obama’s interest in having informal discussions on stopping all the tax hikes, and we hope these talks are productive. At the same time, this is no substitute for action. Republicans made a pledge to America to cut spending and permanently stop all the tax hikes, and that’s exactly what we’re fighting for.”

TAGS: individuals | tax | small business | economics | business | fiscal policy | law | budget | legislation | United States | tax breaks | individual income tax

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