On Thursday, representatives of Republican and Democrat members of the House continued discussing options for how to address the upcoming “fiscal cliff.”
Republican members of the House noted for the first time that they may be open to accepting more tax increases if that is what Democrat representatives require in order to address the various tax cuts that will expire effective January 1, 2013–the fiscal cliff. The comments from the Republican members were a shift from the party’s normal stance aimed at reducing taxes.
In additions, Democrats in the Senate brought even more tax increases to the discussion table. They noted that additional funding is necessary for planned stimulus packages, which will require more taxes than originally planned.
With each day that passes, members of both parties feel increasing pressure knowing the impact failing to reach a deal would have. Based on the current tax cuts that will expire, financial experts have calculated that a family earning just over $70,000 annually would pay approximately $3,000 more in federal income tax.
The primary Republican representative who commented on the tax compromise was Shelley Moore Capito of West Virginia. Capito noted that representatives would likely reach a temporary deal to extend tax cuts for the short term, possibly for one year.
“What I think you will see is a retention of the tax rates as they are for a year, with the promise that we will get into looking at all revenues – and that could include tax rates,” Capito noted. “We will look at all – the tax code in itself, and we will also look at spending cuts and entitlements.”
Originally Republican representatives had stated they were not open to tax rate increase for any group. Instead the focus should be on closing various loopholes and deductions that are available to the wealthiest taxpayers. To date Capito has supported this positions in the face of Democrats and President Obama indicating the wealthiest two percent of taxpayers need to pay higher taxes.
“With respect to the tax rates, I just want to emphasize I am open to new ideas,” President Obama stated earlier this week. “If Republican counterparts or some Democrats have a great idea for us to raise revenue, maintain progressivity, make sure the middle class isn’t getting hit, reduces our deficit, encourages growth, I’m not going to just slam the door in their face. I want to hear ideas from everybody.”
But in spite of President Obama’s comments indicating he is open to ideas not just from his party but from Republican representatives, he is receiving increasing pressure from Democrats in the Senate to increase taxes while reducing the budget in an effort to address the federal deficit more quickly.
Senate Democrats also noted that any federal spending cuts could not come from various benefits to those without jobs, including Medicare, Medicaid, and Social Security.
“We urge you to reject changes to Medicaid, Medicare and Social Security that would cut benefits, shift costs to states, alter the structure of these critical programs, or force vulnerable populations to bear the burden of deficit reduction efforts,” Senate Democrats noted in a letter to President Obama.
Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.