Fri, Dec 07, 2012 - Page 7 News List

Republicans weigh deal on tax increase

STRATEGY:Passing legislation now to extend tax cuts may have political advantages for Republicans by denying Obama the additional spending on infrastructure he seeks

Bloomberg

Representative Steve LaTou-rette of Ohio said Boehner could gather the 218 votes needed to send a tax increase to the Democratic-majority Senate if about 120 House Democrats “buy in” on changes to entitlement programs, such as raising the eligibility age for Medicare or adjusting the annual Social Security cost-of-living formula.

Aides to Boehner and House Majority Leader Eric Cantor of Virginia are playing down the number of Republicans willing to defect on tax rates. Publicly, the speaker has given no indication he willl change his position.

Last week, Cole was the first high-profile Republican to say his party should lock in the George W. Bush-era income tax cuts for 98 percent of Americans by the end of the year and allow them to expire for the top 2 percent of earners. Other Republicans began nodding in agreement.

A potential tax compromise may include raising Obama’s US$250,000 annual income threshold to US$500,000 or US$1 million, or raising rates for top earners short of the 39.6 percent level during President Bill Clinton’s administration, Simpson said.

That could be combined with ending or capping some deductions and credits that has support in both parties, he said.

Democrats would need to respond by agreeing to cuts in entitlement programs. Options include an increase in the Medicare eligibility age, changing the way Social Security cost-of-living payments are calculated and trimming benefits or increasing co-payments for wealthier recipients.

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