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US Business Chiefs Accept Tax Hikes As Part Of "Fiscal Cliff" Solution

by Mike Godfrey, Tax-News.com, Washington

14 December 2012


A recent letter to United States Congressional leaders from the Business Roundtable (BRT) urged them to take urgent action to prevent the "fiscal cliff," by means of a balanced solution including both revenue growth and spending reductions.

The letter from the BRT, signed by 168 chief executive officers (CEOs) of leading American companies representing more than USD7.3 trillion in annual revenues and more than 16m employees, pointed to the significant negative economic, employment and social consequence if the US goes over the fiscal cliff.

They pledged their "active support for a compromise that includes comprehensive and meaningful tax and entitlement reforms that result in market-credible spending reductions and revenue growth."

However, the CEOs stressed that "no options should be precluded from a potential solution," to address these challenges.

In giving that pledge, they appeared to go further than the Republican Party in accepting that a compromise could involve letting the Bush tax cuts expire for those earning over USD250,000, as is being insisted upon by President Barack Obama.

"Compromise will require Congress to agree on more revenue," the BRT added, "whether by increasing rates, eliminating deductions, or some combination thereof – and the Administration to agree to larger, meaningful structural and benefit entitlement reforms and spending reductions that are a fiscally responsible multiple of increased revenues."

The House of Representatives Ways and Means Committee Chairman, Dave Camp (R – Michigan), was adamant, however, in his retort to the letter. "Big business may support raising tax rates on small businesses, but I do not," he said. "The solution to the fiscal cliff isn't higher tax rates, which economists agree will destroy hundreds of thousands of jobs for middle-class families. Republicans remain committed to finding a balanced solution to the fiscal cliff – one that involves both savings from substantive entitlement reforms and higher revenues through pro-growth, comprehensive tax reform."

In addition, the Senate Finance Committee’s Ranking Member, Orrin Hatch (R – Utah) was even more scathing. "I get it – these big time CEOs, trying to compete in an increasingly competitive global economy, want corporate tax reform. I want that, too. But to advocate raising taxes on main street businesses in exchange is nonsensical," he replied.

“What kind of message does this send to every mom and pop business across America that the White House is fine with giving corporations a tax cut, while jacking up taxes on the little guys who are the engine of America’s economy?” Hatch asked. “Why should corporations get tax reform but not the average American family or small business owner?”

TAGS: tax | small business | business | tax rates | United States | tax reform | individual income tax

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