by Peter Grady –
In what could be a troubling sign as lawmakers begin discussions on avoiding the so-called “fiscal cliff”, the President has called for tax increases that are nearly double what was previously agreed on between the administration and House Republicans.
Jay Carney, the White House Press Secretary, said the President has insisted on a tax increase of $1.6 trillion in order to raise new revenue for the federal government.
The bulk of the President’s proposal would be to let the Obama tax cuts, which were originally passed during the Bush administration, expire on those earning over $250,000 saying these people are rich and can afford to “pay a little more” as Obama has said. However, this would only raise an estimated $1 trillion. The remaining amount would come from capping deductions.
The amount is nearly double what Obama and House speaker John Boehner had agreed to in 2010 when they previously agreed to an $800 billion framework as a starting point for negotiations.
Republicans have countered that the taxes would affect many small business owners who file as individuals. This could cause many small business owners to either lay off workers or even shut down completely.
Boehner has said Republicans are not opposed to increasing revenue, but that the best way to do it is to reform the tax code rather than raise rates. Some have suggested the President’s goal is not simply to raise revenue but to punish the rich. Boehner has noted that during both the Reagan and Bush administrations, revenues to the treasury increased after taxes were cut. The same thing occurred during the Kennedy administration.
If lawmakers do not reach an agreement on spending cuts and taxes by the end of the year, taxes on all income brackets will automatically rise along with automatic spending cuts of up to $1 trillion in defense spending.