Discussions between the White House and the Speaker of the House of Representatives’ office regarding the “fiscal cliff” received a slight boost over the weekend, when Speaker John Boehner (R-Ohio) signaled his willingness to allow a $1-million income threshold for marginal income, capital gains and dividends tax cuts.
As of press time this afternoon, behind-the-scenes negotiations continued as the country and the economy inch closer to the Jan. 1, 2013, deadline when all 2001-2003 tax rates expire and spending cuts under the Budget Control Act—passed as part of last summer’s debt ceiling debate—will take effect.
While the negotiations are still ongoing, Boehner laid down a marker this week by filing a bill, scheduled to be voted on today, reflecting his proposed changes to the tax code.
The bill would permanently extend current marginal income tax rates, as well as capital gains and dividends rates, for all taxpayers earning less than $1 million. Boehner’s plan would also permanently extend current estate tax rates and exemption amounts, and provides for a permanent fix to the alternative minimum tax (AMT).
House GOP leaders also scheduled a second bill for a vote today that would produce deficit reductions to address the automatic spending cuts under the Budget Control Act.
Unsurprisingly, the White House quickly issued a veto threat against the tax portion of Boehner’s plan, essentially putting an end to the bill’s chances of becoming law as currently written.
The House is likely to still pass the bill today, regardless of its future prospects. This is more of a tactical move by Boehner in an attempt to exert pressure on the White House and Senate Democrats to move toward his positions on overall tax and spending levels.
As part of the broader talks, the two parties still have yet to agree upon topline revenue and spending-cut numbers for the deficit-reduction package. As of press time, the offers from Boehner’s office and the White House are still hundreds of billions of dollars apart.
According to sources, in response to Boehner’s move on taxes over the weekend, the White House offered to cut discretionary spending—as opposed to mandatory spending in entitlement programs—$200 billion further and to raise the income threshold for tax increases for joint filers from $250,000 to $400,000.
The incremental moves of late by both parties appear to be moving the negotiations in the right direction, but are no guarantee that a deal will be struck before the year’s end.
As the talks move forward, the Big “I” government affairs team will continue to work hard to ensure member small businesses’ best interests are served.
Ryan Young is Big “I” senior director of federal government affairs.