A leading Republican has offered a glimmer of hope for a potential compromise in the fiercely partisan US debate over extending middle class tax cuts.
The US Congress returns from recess this week amid discussions about boosting the economy by extending Bush administration tax cuts that are due to expire.
The White House has argued for only extending cuts for households with an income of less than $250,000, while Republicans want all reductions to be kept.
On Sunday John Boehner, Republican leader in the House of Representatives, suggested he might vote for only the tax cuts on middle-income Americans. He told CBS television that while he favoured extending all the tax cuts that dated from the era of George W. Bush, he would vote for a partial extension if necessary.
“If the only option I have is to vote for some of those tax reductions, I’ll vote for it,” he said. “If the only option I have is to vote for those at 250 and below, of course I’m going to do that”.
The tax cuts, which were passed with a time limit to keep down their cost, are due to expire at the end of the year. President Barack Obama argues that since the rich are less likely to cut spending if their tax cuts are rescinded, extending those cuts will do little to help the economy.
“We welcome John Boehner’s change in position and support for the middle class tax cuts, but time will tell if his actions will be anything but continued support for the failed policies that got us into this mess”, said Robert Gibbs, White House spokesman, on Sunday.
Austan Goolsbee, the newly appointed chair of the White House council of economic advisers, said on Sunday that the middle class tax cuts took priority before anything else. “Borrowing $700 billion to extend tax cuts that average more than $100,000 a year to millionaires and even billionaires is the least effective bang for the buck we have,” he told ABC television.
Peter Orszag, who recently resigned as head of the White House budget office, caused a stir recently by arguing that all the tax cuts could be extended for a couple of years. On Sunday he said that the suggestion was a tactical one designed to provide a short-term boost while preserving longer-term fiscal sustainability. “If the price of not making the tax cuts permanent is extending all of them, even the upper income ones, for a year or two, that would be a price worth paying,” he told CNN.
Mr Goolsbee played down the apparent difference of opinion, saying that Mr Orszag’s speech was a political rather than an economic intervention.
The performance of the economy and particularly of unemployment is emerging as one of the most important issues in the forthcoming midterm elections in November. Mr Goolsbee said that after such a deep recession, unemployment was likely to remain high for a while.
“[Unemployment] is going to stay high,” he said. “I don’t anticipate it coming down rapidly.”
The cuts reduced taxes on income, dividends and capital gains and increased tax credits for retirement and education savings. They represent around 2 per cent of GDP, a relatively small proportion of current deficits but a substantial part of estimates of the medium-term deficit.
13 comments:
These tax cuts are already helping out the middle and lower classes. In my opinion if anybody is gonna be taxed it should be the million and billionaire(I mean how much of a skin is gonna be off their backs? Right?)they're rich enough to pay those taxes. I bet that the money that slips into the couch is enough to pay for the taxes.
I think extending the tax cuts is a good idea. With the way they focus on retirement and education funds, which is what most middle class adults center their finances around, its in the best interest of the middle class people. Also, since the unemployment rate isn't expecting a decrease anytime soon, increasing taxes for the large middle class would put a strain on more people than it would help.
Well, at least Boehner is going against the grain. However, the same cannot be said for almost every other Republican. I don't want to say that Republicans are only looking out for themselves, but really? The people that apologized to BP for Obama making them pay for the horrible damage they caused, because they're invested in oil companies? They get mad for Obama adding $50 billion to the deficit for infrastructure and yet extending the Bush tax cuts for the super rich will add $700 billion? I don't know. This just does not seem like a smart move for Republicans during election season, but the way it's been looking lately, who knows? Disclaimer: I apologize for any fact I may have gotten wrong.
It should not be just one class having to pay taxes. If one person has to pay everyone has to pay. There should be no handouts.
I think tax cuts for the middle class and below is a good idea. If a household is making 250K or more a year, they're probably not hurting too much from taxes anyways.
These taxes will really help the economy and I don't agree about the 250,000$ rule because i believe anyone who is getting paid more than 75,000 a year has the ability to easily pay their taxes, its the people who get paid like 30,000 a year who are in a little trouble when it comes to taxes because of the large percentage of their earnings being cut off by the taxes.
Our large middle class really needs these tax cuts. These "millionaires and billionaires" can surely pull out even some pocket change to pay off their taxes. This issue really hits home because my dad is ready to retire and I've had to hit the scholarship hunts (like many other students across the country). Its just like Sarah said, increasing taxes on the middle class would surely put a lot of strain on its people.
I think that the tax cut will really hope all the middle and lower classes people. But also I feel bad about the higher class people. Some higher class people are really frugal. If i am really rich, and i won't feel safe if they only cut the tax of middle to lower class people. So i think if they are going to cut tax they should cut it for everyone.
I think this is an awesome idea. The middle class seems to always get the short end of the stick here lately. I agree with Orszag in that this tax cut should last at least a for a couple of years instead of it lasting until the end of this year. He has faith that this tax cut will actually help boost the system even if it means extending the cut to the upper class.
I have to agree with Weizhou. Honestly, if people have enough money to buy six cars they have enough to pay taxes. And increasing the taxes for the middle class would just be ridiculous, adding to the already stressed financial situation of many families.
I agree with Lia that most Republican's are not like Boehner but I am really hopeful that with enough support, the tax cuts will be extended. It will benefit the majority of American citizens and help many deal with the strain of recession. Even if the wealthier class are being taxed a great deal more, they are much less affected. If they can afford private jets then they can definitely afford to contribute a bit more to the government.
I don't pay taxes the closer to that I stay the happier I will be! So being in the middle class these tax cuts help tons. Maybe when I'm a billionaire I won't mind taxes as much.
Extending the tax cuts seems like a really good idea, especially for the middle class. If the unemployment rate isn't expected to go down any time soon, raising taxes would only make matters worse, and possibly put us right back where we were. If the only option to keep the taxes down for those who would lose jobs with higher taxes is taxing the rich, then so be it; they would be making sacrifices for the better of the US economy, which is something we all should be willing to do if we want to keep our country's head above water.
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