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Republican Leader Cantor Urges Extending Tax Cut for Wealthy

Monday, 08 November 2010 08:17 AM

Representative Eric Cantor of Virginia, the House’s No. 2 Republican, said Congress should do more than approve just a short-term extension of current tax rates for top earners, as a battle looms in Congress over the expiration of the tax cuts enacted under former President George W. Bush.

Cantor said failing to extend the reduction for the highest-earners on the same terms as for other Americans would create uncertainty that would threaten economic recovery.

“I am not for decoupling the rates,” Cantor said yesterday on the “Fox News Sunday” program. “I am not for raising taxes in a recession, especially when it comes to job creators.”

Republicans, who will take control of the House in January after last week’s election victory, disagree with many Democrats on the future of the tax cuts that were enacted in 2001 and 2003 under Bush. The lower rates would expire at the end of the year without congressional action, forcing lawmakers to address the issue in a lame-duck session beginning later this month.

President Barack Obama said he wants to negotiate with Republicans on the issue.

“Hopefully we can agree on a set of facts that leads to compromise,” the president said in a CBS “60 Minutes” interview. “My number one priority coming into this is making sure that middle-class families don’t see their tax rates go up Jan. 1.”

Temporary Extension

In the Senate, where Republicans will remain in the minority in January, their leader, Mitch McConnell of Kentucky, said his party is willing to consider a temporary extension of the current top tax rates.

“We’re willing to start talking about getting an extension of some kind,” McConnell said on CBS’s “Face the Nation” yesterday. “We don’t think raising taxes on small business is a good idea.”

Obama has opposed keeping the tax cuts for individuals making more than $200,000 a year and married couples earning more than $250,000. White House spokesman Robert Gibbs said Nov. 4 that the president is “open” to negotiations for a temporary extension of all the tax rates.

Cantor said such a temporary extension would suggest that rates will rise in the future. “I am not for sending any signal to small businesses in this country that they’re going to have their tax rates go up,” he said on Fox.

Bush Tax Cuts

The fight over the Bush tax cuts is developing as Republicans call for reduced government spending. In television appearances yesterday, Republican leaders said the $1.3 trillion federal deficit is a sign of excessive spending, not the need for more revenue.

“The federal government doesn’t have this problem because it taxes too little,” McConnell said. “The federal government has this problem because it spends too much.”

Obama has invited congressional leaders from both parties to the White House on Nov. 18 to talk “substantively about how we move the American people’s agenda forward.”

Extending the tax cuts on the first $250,000 of household income would add more than $3 trillion to the debt over the next decade. Obama has said the U.S. can’t afford to lose an additional $700 billion in revenue that would be brought in by letting rates rise for the top 3 percent of taxpayers.

Small Business

Cantor and the Republicans say raising the rate on high- income individuals would boost taxes on small business because partnerships, sole proprietors and so-called S-corporations let people report business income on their individual taxes. That definition includes actors, authors and investors such as George Soros, along with bona fide small businesses.

Obama and Democrats say restoring the tax rate to 39.6 percent from 35 percent now would affect fewer than 3 percent of small businesses.

With a jobless rate at 9.6 percent, the economy was a top issue in the Nov. 2 midterm elections in which Republicans won a majority in the House of Representatives and narrowed the Democratic edge in the Senate.

Senator-elect Rand Paul, a Kentucky Republican, said the government must halt the growth of its debt and may need to cut wages for federal employees, raise the retirement age and consider cutting Social Security benefits for those under 55.

Debt Limit

He and Senator James DeMint, a South Carolina Republican, said in television appearances that they would oppose raising the limit on how much debt the government can assume, which Congress may need to vote on next year.

“We need to shrink the size of government,” Paul said on ABC’s “This Week” program.

Federal Reserve policy makers last week announced a second round of large-scale asset purchases in a bid to boost growth, even as recent reports showed larger-than-forecast gains in retail sales and manufacturing.

Congressman Paul Ryan of Wisconsin, in line to become Republican chairman of the House Budget Committee, said the planned $600 billion purchase of Treasuries by the central bank is a “big mistake.”

“This is going to give us an inflation problem in the future,” Ryan said on Fox. “The Fed should focus on keeping our money sound and honest.”

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Representative Eric Cantor of Virginia, the House s No. 2 Republican, said Congress should do more than approve just a short-term extension of current tax rates for top earners, as a battle looms in Congress over the expiration of the tax cuts enacted under former President...
Monday, 08 November 2010 08:17 AM
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