President Obama said a Republican proposal to preserve the full array of Bush administration tax cuts for two more years presents a "basis for conversation" that could lead to a compromise as lawmakers prepare to meet next week for a high-stakes showdown over taxes.
However, a senior House Republican on Sunday flatly rejected the option most favored by the White House: decoupling the Bush tax cuts that benefit the wealthy from the cuts that benefit the vast majority of Americans by extending each set of provisions for a different period of time.
"No, I am not for decoupling the rates," Rep. Eric Cantor (R-Va.), the No.2 Republican in the House, said on "Fox News Sunday." He echoed the GOP argument that such a move virtually would guarantee the eventual expiration of tax breaks in the upper brackets, where some of the most successful small businesses pay taxes.
"I am not for raising taxes in a recession, especially when it comes to the job creators that we need so desperately to start creating jobs again," Cantor said. "I am not for sending any signal to small businesses in this country that they're going to have their tax rates go up."
The narrative has definitely moved to the GOP's advantage after the election. There is no longer any serious debate about letting them all expire permanently. It's now just about making the tax cuts for those that make over $250K p/yr permanent or just extending it for another couple years or so.
These "tax cuts" have been in place for a decade. So, we are really talking about tax hikes not cuts.
Of course, if Obama gets his way and the taxes for those making over $250K are only extended but the rest are made permanent, then, the Dems are hoping that it'll hurt the Republicans, when they'll presumably argue for making them permanent a few years from now.
All of the tax cuts need to be made permanent. That way there will be no more uncertainty in the economy. Businesses will stay apprehensive about expanding their business and hiring more people, if they don't know what the tax rates will be from year to year.
It would be like me buying an expensive car that will have me paying a car note for a few years, when I have no idea if I'll have even a job in six months. People would rather hold off on purchasing the care until they were SURE that they'll still have a job at the beginning of the year. Businesses are doing the same, now, and will continue to do so, until they know for sure what the tax rate will be from year to year.