The House under leadership of House Speaker John Boehner is going forward with a vote on a plan to address the tax increase that will go into effect in less than two weeks at the start of 2013.
The proposal known as “Plan B” would increase taxes only on those who earn $1 million or more. Taxes for all other income earners would remain in place at 2012 rates.
Boehner has chosen to move forward with the plan because discussions with President Obama had hit a roadblock and did not appear to be moving toward a resolution before the end of the year.
However, President Obama and Senate Majority Leader Harry Reid are still opposed to Plan B and President Obama has said he would veto Plan B if it makes it to his desk. In response Boehner has challenged to help address the issue and convince Senate Democrats to support the plan.
“Tomorrow, the House will pass legislation to make permanent tax relief for nearly every American,” Boehner said in a press conference on Wednesday. “Then the president will have a decision to make. He can call on the Senate Democrats to pass that bill or he can be responsible for the largest tax increase in American history.”
Previously the President had identified $250,000 as the level above which earners should pay more taxes starting in 2013, and Boehner had indicated he was not willing to accept tax increases for any income earners.
But as recently as the beginning of this week the President appeared willing to consider a higher income level and Boehner decided to consider a tax on those who earn more than $1 million.
However, by mid-week those discussions had broken down. And Plan B was put forward as the only viable option on the table at present.
President Obama had planned to leave Washington on Friday to begin a family Christmas vacation. However, it now appears he will stay in Washington to ensure he is available for ongoing discussions.
The concern from President Obama appears to be only in part the $1 million income threshold noted in Plan B. Officials from President Obama’s administration also noted concerns about Plan B’s failure to address an almost 10 percent budget decrease for the Pentagon and expiring unemployment benefits that means those benefits will run out at the start of 2013 for around 2 million individuals.
Brendan Buck, a spokesperson for Boehner’s office, noted that “opposition to a back-up plan to ensure taxes don’t rise on American families is growing more bizarre and irrational by the day.” Boehner’s office sees Plan B as a wise proposal to have prepared in the event President Obama and Speaker Boehner are unable to come to an agreement.
In addition, Democrats are concerned with Plan B’s reduction in planned cost of living increases for Social Security recipients.
“The less money our Social Security recipients – including 9 million veterans – are able to spend, the less money goes to the businesses that create jobs,” noted Arizona Democrat Representative Raul Grijalva. “It’s a Beltway fig leaf that I will never support, and I call on my colleagues to make their feelings known as soon as possible.”
Despite all the concerns from both parties, both sides are in fact closer to reaching a deal and there is reason for optimism that a deal will be done before the New Year.
President Obama stated yesterday that “I’d like to get it done before Christmas.”
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.