Winnipeg Free Press - ONLINE EDITION

A moderate fix for a looming tax cliff

  • Print

It wasn’t exactly a Kumbaya moment, but top congressional Republicans offered Wednesday to meet the president halfway when it comes to solving the government’s fiscal woes. In fact, House Speaker John A. Boehner, R-Ohio, said he would support a tax code overhaul that raised more revenue — an apparent departure from the House GOP’s no-new-taxes orthodoxy.

There’s an opportunity here for President Obama to finally obtain the "grand bargain" he’s been talking about for years, a deal that brings the federal deficit and debt under control by cutting spending, slowing the growth of entitlements and, yes, raising revenue.

It would be a mistake to read Boehner’s statements to the media as a concession, especially considering the barbed remark from Senate Minority Leader Mitch McConnell, R-Ky., that "the voters have not endorsed the failures or excesses of the president’s first term." Both men denied that Obama had a mandate from the voters to end the Bush-era tax cuts for the wealthy, which has been a central feature of Obama’s economic plan.

Those tax cuts cost about $700 billion over the course of a decade, which is too much at a time of trillion-dollar deficits. But there are other ways besides raising tax rates to collect more revenue while still preserving the progressivity of the tax code.One example is rolling back the exemptions, deductions and other preferences available to high-income taxpayers.

Many economists argue that it’s better to go that route than to raise rates because tax preferences distort markets, while higher rates promote tax evasion and discourage work. And at least two bipartisan panels, including one created by Obama, have laid out blueprints for tax reforms that would raise significant revenue by reducing preferences while lowering rates.

One potentially insurmountable hurdle, though, is that seemingly every tax break has a powerful constituency. It would take great political will to roll back such things as the deduction for charitable donations and the preference for capital gains; they’re not only popular, they may also promote behavior that society values.

Nevertheless, Obama should think creatively about how to raise revenue equitably without raising tax rates or stunting growth, rather than being wedded to a particular plan. And if the GOP proves unwilling to move out of its corner, the president should let the country know that Republicans were just bluffing about bipartisanship.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Glenn January won't blame offensive line for first loss

View more like this

Photo Store Gallery

  • Young goslings are growing up quickly near Cresent Lake in Portage La Prairie, Manitoba- See Bryksa 30 Day goose project- Day 11- May 15, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • Marc Gallant/Winnipeg Free Press. Local/Standup- BABY BISON. Fort Whyte Centre's newest mother gently nudges her 50 pound, female bull calf awake. Calf born yesterday. 25 now in herd. Four more calfs are expected over the next four weeks. It is the bison's second calf. June 7, 2002.

View More Gallery Photos

Poll

Which of Manitoba's new landlord-tenant rules are you looking forward to most?

View Results

View Related Story

Ads by Google