Geithner says capping deductions won’t be enough
Obama is not prepared to extend upper-income tax cuts
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.