The Republican plan to raise revenue through tax reform, rather than increasing tax rates, is possible, but would be difficult to pass because the tax preferences that would need to be eliminated are widely favored among voters, explained Diane Lim, chief economist for the Concord Coalition, in a Thursday interview with The Christian Post.
One of the main sticking points in the negotiations between the White House and House Republicans over averting the "fiscal cliff" is the source of new revenue. President Barack Obama and Democrats want the tax rates to go up for the top two tax brackets, or those making more than $250,000 per year. Republicans want to eliminate tax preferences, such as deductions, exclusions and credits. Democrats have argued that there is not enough revenue that could be raised from eliminating tax preferences, so tax rates must increase as well.
Together, all of the tax preferences from both the corporate and income tax code add up to a little over $1 trillion per year, explained Lim. So, there is more than enough revenue that could be raised from tax reform to meet the goal of reducing deficits by $4 trillion over 10 years. The difficulty, though, is that most of that revenue comes from tax preferences, sometimes called tax expenditures, enjoyed by many, thus members of Congress would be reluctant to get rid of them. more >>
President Barack Obama told Speaker of the House John Boehner Thursday that there would be no agreement to avert the "fiscal cliff" unless tax rates are increased on those making more than $250,000 per year. Boehner expressed concern that Democrats have shown no willingness to reduce the rate of growth in entitlement spending.
The two leaders at the center of the negotiations, Boehner and Obama, spoke for about minutes Wednesday night according to aides. In that conversation, Obama insisted on tax rate increases for those making more than $250,000 per year, according to Politico. Also, on Thursday, Boehner met for 45 minutes with Treasury Secretary Timothy Geithner, who is leading the White House negotiations. Boehner emerged from those meetings skeptical that a deal could be reached.
"No substantive talks have been made in talks between the White House and the House over the last two weeks," Boehner said in a press conference after the meeting with Geithner. more >>
As the nation careens toward the end of the year "fiscal cliff," politicians and pundits are expressing many assumptions, some of which are incorrect. Here are five common myths about the fiscal cliff.
Myth #1: Democrats Want to Compromise, Republicans Do Not
A plurality of Americans believe that if a compromise is not reached, Republicans will be mostly to blame. This should come as no surprise when much of the reporting on the fiscal cliff implies that House Republicans are the main obstacle to reaching an agreement. more >>
Congressional Democrats are saying that they are not willing to consider changes in Social Security in a deal to avoid the "fiscal cliff," even though the Simpson-Bowles commission charged with coming up with a plan insists that Social Security can't be ignored.
Sen. Dick Durbin (R-Ill.) argued on ABC's "This Week" on Sunday that Social Security needs only a few small tweaks and no major reforms to ensure the long-term solvency of the program.
"Social Security does not add one penny to the deficit," he said. "Not a penny. It's a separate funded operation, and we can do things that I believe we should now, smaller things, played out over the long term that gives it solvency." more >>
As President Barack Obama and members of Congress negotiate a solution to the pending "fiscal cliff," they should protect programs for the poor, argued the Circle of Protection, an association of religious leaders, in an open letter released Tuesday.
"As we do all we can to help families and individuals living in poverty, we need our elected leaders in Washington to do the same. Our country faces many long-term fiscal challenges and must act now to grow the economy, create jobs, and begin reducing our deficits. These are significant challenges that will require sacrifices from many, but we cannot solve them on the backs of the poor," the letter states.
The fiscal cliff is a set of automatic tax increases and spending cuts that will go into effect next year unless Obama and Congress agree to changes. The Congressional Budget Office has warned that the fiscal cliff will likely cause a recession, but preventing the fiscal cliff without replacing it with long-term deficit reduction would cause even greater problems in the future because the nation's debt, now over $16 trillion, will become unsustainable. more >>
President Barack Obama and his fellow Democrats have been arguing that Republicans want to protect tax cuts for "millionaires and billionaires," even though Democrats are really talking about raising taxes on those making more than $250,000. An idea appears to be floating around some Republican congressional circles to offer to raise taxes on actual millionaires while preventing taxes from going up for those making more than $250,000.
One of the concerns Republicans have about raising taxes on those making more than $250,000 is that it will raise taxes on many small business owners who pay personal income taxes rather that corporate taxes. If taxes are raised on small businesses during a slow economy it could slow hiring, they argue.
One of the main sticking points so far in negotiations over what to do about the "fiscal cliff" is that Republicans want to raise revenue by only eliminating tax deductions and credits and some Democrats are insisting on increasing tax rates on upper income Americans. more >>