The White House delivered a proposal for a deficit solution; then it was the Republicans’ turn, now it’s the Democrats’ turn to counter.
Such is the banter around any serious solution for the deficit and, by default, the fiscal cliff. There are sticking points with both sides seeming to dig deeper into their respective trenches.
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Yet, the most difficult aspect of the negotiations is much smaller: deciding how much the down payment on the deficit should be.
President Obama and House Speaker John Boehner agree that Congressional committees must, after the first of the year, work out changes to the tax code and entitlement programs to the tune of $1 trillion in savings.
Both want approval of a first installment on deficit reduction before that happens.
The GOP made a counter offer of $800 billion in deduction caps and entitlement savings to the White House proposal calling for a $1.6 trillion increase in taxes delivered by Treasury Secretary Timothy Geithner last week.
Now the Democrats are introducing a plan that would raise an additional $1.8 trillion in the first decade.
The new proposal was written by the two former Treasury secretaries—Robert Rubin and Lawrence Summers—who served under the good economy back during the Clinton years.
It calls for raising top tax rates back to the 39.6% level of that time while keeping other rates at current levels.
The difference is the tax hike threshold--$422,000 and up for both individuals and couples instead of the $200,000 for individuals and $250,000 for couples in the White House proposal.
Capital gains taxes would go back to 28%--the level in effect during the Reagan years, another time of economic prosperity.
Tax payers making under $100,000 annually would see virtually no change; those making between $100,000 and $500,000 would see minimal change; and those making $1 million or more would see an average hike of 5%.
You can read more details about the down payment and the respective counter proposals here
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