Gei­th­ner says cap­ping de­duc­tions won’t be enough

Obama is not pre­pared to ex­tend up­per-in­come tax cuts

The Pak Banker - - Front Page -

WASH­ING­TON

US Trea­sury Sec­re­tary Ti­mothy F. Gei­th­ner said the US must raise per­sonal in­come-tax rates on the high­est earn­ers to re­duce long-term bud­get deficits be­cause cap­ping de­duc­tions won’t raise enough rev­enue.

Pres­i­dent Barack Obama is not pre­pared to ex­tend the up­per­in­come tax cuts, Gei­th­ner said Wed­nes­day at the Wall Street Jour­nal’s CEO Coun­cil meet­ing in Wash­ing­ton. “There’s ob­vi­ously univer­sal sup­port for the mid­dle-class tax cuts. Do­ing that would re­move the great­est source of anx­i­ety and much of the great­est risk in the fis­cal cliff.” Gei­th­ner com­ments set a marker be­tween the ad­min­is­tra­tion and Repub­li­can law­mak­ers as they pre­pare for talks on an agree­ment to re­duce long-term bud­get deficits and to avoid $607 bil­lion in spend­ing cuts and tax in­creases set to take ef­fect Jan. 1. The Con­gres­sional Bud­get Of­fice has fore­cast that the so-called fis­cal cliff would push the econ­omy into a re­ces­sion next year.

Obama has said re­peat­edly that he won’t ex­tend the Bush-era tax cuts for the high­est-in­come Amer­i­cans and his spokesman, Jay Car­ney said the pres­i­dent would veto “any bill” that ex­tends the cur­rent rates for the top 2 per­cent of wage earn­ers.

The same day, House Speaker John Boehner, an Ohio Repub­li­can, cited pub­lic sup­port for the re-elected House Repub­li­can ma­jor­ity and said tax rates must not go up. Still, Boehner has em­pha­sized op­po­si­tion to higher tax rates, rather than talk­ing about higher taxes or higher rev­enues. He has en­dorsed the idea of higher rev­enue through an over­haul of the tax code with­out say­ing ex­plic­itly whether he would sup­port a tax in­crease or the elim­i­na­tion of tax breaks with­out a cor­re­spond­ing rate cut.

“Shoring up en­ti­tle­ments and re­form­ing the tax code — clos­ing spe­cial-in­ter­est loop­holes and de­duc­tions, and mov­ing to a fairer, sim­pler sys­tem — will bring jobs home and re­sult in a stronger, health­ier econ­omy,” the speaker said on Nov. 7.

Gei­th­ner yes­ter­day cast doubt on the idea that clos­ing loop­holes or lim­it­ing de­duc­tions could raise enough rev­enue.

“When you take a cold, hard look at the amount of re­sources you can raise from that top 2 per­cent of Amer­i­cans through lim­it­ing de­duc­tions, you will find your­self dis­ap­pointed rel­a­tive to the mag­ni­tude of the rev­enue in­creases that we need,” Gei­th­ner said. In the Se­nate, Republicans and Democrats also squared off. Or­rin Hatch, a Utah Repub­li­can, said in an in­ter­view yes­ter­day that higher tax rates are “not go­ing to be” part of any deal.

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