John Boehner the Republican House Speaker proposed an increase in tax rates for people who earn over $1 million, said a source familiar with the ongoing talks on Capitol Hill. This new developmental might be a sign that some sort of movement is being made to reach a deal with the White House.
The source said that the latest offer has not been rejected, but issues still exist and there is an effort to work on the differences. All this negotiation is due to the Bush tax cuts that automatically end as of January 1 for nearly every taxpayer if the President and Congress do not act. In addition, there will be huge budget cuts that will kick in at the same time unless Obama and the Congress agree to change them with other reduction measures.
Some economists have warned that the recovery by the economy would be put into reverse by the now famous “fiscal cliff.” Ben Bernanke, the Chairman of the Federal Reserve said during the week that recent uncertainty by consumers has already affected the economy and warned that the fiscal cliff’s affects would not be offset by the Fed.
Boehner, until now, maintained opposition to increasing any tax rates. He instead proposed to increase tax revenue by nearly $800 billion over the next 10 years through limiting tax deductions and loopholes as part of making a broad based overhaul to taxes.
However, Boehner and other House Republicans are coming under increased pressure from Senate Republicans who urged they yield to the demand on cuts made by Obama.
