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Boehner: Revenue Increases Could Be Part Of 'Fiscal Cliff' Solution

by Mike Godfrey, Tax-News.com, Washington

03 December 2012


United States House of Representatives Speaker, John Boehner (R – Ohio), who will lead any future negotiations with President Barack Obama on resolving the problems represented by the impending "fiscal cliff" and increased government debt, has confirmed the Republican Party’s willingness to discuss a balanced solution, involving both increased tax revenue and spending cuts.

It is recognised on all sides that, not only will a decision need to be taken by the end of this year on the over USD600bn of US 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 favoured 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.

Republican lawmakers, while they are obviously not against maintaining the other lower-income Bush tax cuts, are looking to negotiate a balanced package which would, in part, include revenue found from closing some or all of the individual income tax deductions, exemptions and credits that are still available for those earning higher incomes, to replace the revenue lost from renewing the higher-income Bush tax cuts as well.

Following a meeting with President Clinton’s former White House Chief of Staff Erskine Bowles and the "Fix the Debt" coalition of business leaders to discuss solutions to the "fiscal cliff", Boehner reiterated that “people in both parties agree we need a ‘balanced approach’ to deal with our debt. One thing Republicans won’t be party to is a deal that protects big businesses and preserves special-interest tax breaks while raising tax rates on the small businesses we’re counting on to create jobs.”

“To show we’re serious about reaching a bipartisan agreement,” he added, “we have offered to accept some new revenues, provided the revenue comes from tax reform and is accompanied by significant spending cuts. Without spending cuts and entitlement reform, it is impossible to address our country’s debt crisis. We put revenue on the table. Now, it’s important for President Obama to tell the American people what spending cuts they're willing to make.”

In addition, after a Party meeting, he confirmed that Republicans are committed to continuing to work with the President to come to an agreement, and that was “one reason why we believe that we’ve put revenue on the table as long as it’s accompanied by serious spending cuts to avert this crisis… In order to try to come to an agreement, Republicans are willing to put revenue on the table, but it’s time for the president and Democrats to get serious about the spending problem that our country has.”

On the other hand, on the same day, at a pre-arranged press briefing, President Obama repeated his warning of the economic effects of raising "middle-class" tax rates and continued to call on Congress to pass immediately the lower-income Bush tax cuts for which both sides are in agreement.

“Right now,” he said, “Congress can pass a law that would prevent a tax hike on the first USD250,000 of everybody’s income… 98% of Americans, 97% of small businesses would not see their income taxes go up by a single dime. Even the wealthiest Americans would still get a tax cut on the first USD250,000 of their income.”

The President expected that: “If we get this part of it right, then a lot of the other issues surrounding deficit reduction in a fair and balanced and responsible way are going to be a whole lot easier.”

He has, however, indicated in the past that he will never sign an extension of the high-end Bush tax cuts, as he remains unconvinced that sufficient revenue can be found from closing tax deductions and credits for wealthier taxpayers to cover the lost revenue. Furthermore, he and the Democrat Party have yet to express any thoughts on areas for spending cuts.

TAGS: individuals | tax | small business | economics | business | fiscal policy | law | tax credits | tax rates | United States | tax breaks | tax reform | individual income tax

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