President Barack Obama’s call for raising taxes by focusing on spending in the tax code was immediately rejected by top Republicans, signaling that any effort to increase the government’s take from the economy would be difficult to move through Congress.
As part of a $4 trillion deficit-reduction plan announced last week, Obama said he wanted Congress to overhaul the tax code by lowering rates, eliminating tax breaks and generating more money than the current system does. The plan would allow tax cuts affecting high-income taxpayers to expire at the end of 2012 and would raise $1 trillion on top of that.
Republicans, including House Speaker John Boehner and Senator Orrin Hatch, rejected Obama’s argument that tax increases should be part of a deficit-reduction package.
“I don’t think we’re any closer to actually doing a bill than we were a day ago or a month ago,” said Clint Stretch, managing principal of tax policy at Deloitte Tax LLP in Washington. “Given the fundamental disagreement on top rates and the fundamental disagreement on who should bear the tax burden, it’s going to take a while for the parties to work together.”
He reiterated his support for lowering the corporate tax rate and removing business tax breaks. His backing for revenue- raising tax changes puts him at odds with many congressional Republicans, including House Majority Leader Eric Cantor of Virginia and Ways and Means Chairman Dave Camp of Michigan, who contend that deficit reduction should be accomplished through spending cuts alone.
“Any plan that starts with job-destroying tax hikes is a non-starter,” Boehner, an Ohio Republican, said in a statement last week.