By Tim Montgomerie
There is plenty of evidence in today's newspapers suggesting that Republicans are ready to confront Obama with their demand that all of George W Bush's tax cuts be renewed. This is the LA Times' take:
"In another ominous sign of new political gridlock developing in Washington, House Republican leaders Sunday took a hard line on compromising with President Obama on extending tax cuts that are due to expire at the end of the year... ""At a time when we are going to ask folks across the board to make such difficult sacrifices, I don't see how we can afford to borrow an additional $700 billion from other countries to make all the Bush tax cuts permanent, even for the wealthiest 2% of Americans," [Obama] said. Republicans say extending the tax cuts for everyone is crucial at a time of economic weakness in the country."
Quoted by USA Today Eric Cantor on Fox News Sunday, said, very plainly, "I'm not raising taxes in a recession." It's certainly hard to see the new generation of Tea Party Republicans voting to raise taxes after being elected on the simple mission of cutting spending.
For Clive Crooks in the FT($), both the White House and the Republicans should agree on a tax simplication agenda. "Since the last big simplifying reform in 1986," he writes, "the US income tax base has been chiselled away by numerous exemptions and “tax expenditures”, interacting in complex ways. The system needs high marginal rates to raise puny amounts of revenue. The bargain waiting to be struck is obvious. Simplify the tax code; narrow some exemptions and eliminate others; broaden the tax base, possibly with new taxes. This way, you can cut tax rates (a win for Republicans) and raise more revenue (a win for Democrats)."
He recommends the following plan:
- Obama agrees to a temporary extension of all Bush tax cuts on the condition that Republicans agree to an broadening of the overall tax base, meaning lower marginal rates and higher revenues
- The Bush tax cuts then expire when these changes are brought forward.
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