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VOL. 125 | NO. 217 | Monday, November 8, 2010

GOP, Obama Embrace Bush Tax Cuts Compromise

ANDREW TAYLOR | Associated Press

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WASHINGTON (AP) – A possible compromise on extending Bush-era tax cuts for rich and poor alike – at least for a while – is in the works after the Republican triumph in midterm elections.

A day after President Barack Obama signaled flexibility on taxes following the "shellacking" voters delivered to Democrats, White House press secretary Robert Gibbs said Obama is willing to consider a compromise for a one- or two-year extension of the full roster of tax cuts, even for families earning more than $250,000 a year.

"He'd be open to having that discussion," Gibbs said.

Obama's long-standing position has been that individuals with incomes less than $200,000 a year and couples making less than $250,000 should continue to enjoy the tax cuts enacted during George W. Bush's presidency, but that income above that should be taxed at the higher rates in effect before Bush took office.

The tax cuts, enacted in 2001 and 2003, are due to expire Dec. 31. They include lower income tax rates, a $1,000 per-child tax credit, relief for married couples and lower taxes on investments and large estates.

Gibbs said the White House wants the issue dealt with before Jan. 1 so that taxpayers will avoid seeing more money withheld from their paychecks or being hit by the higher alternative minimum tax, or AMT. The AMT would hit 26 million upper- and middle-income families with tax bills in April averaging $2,600 higher, according to congressional estimates.

Gibbs said the White House wants the issue dealt with before Jan. 1 so that taxpayers will avoid seeing more money withheld from their paychecks or being hit by the higher alternative minimum tax. This would produce an average $3,700 higher tax bill come April for some 30 million middle-income families.

"I think what the president believes is that we have both houses coming back and that this is an issue that must and has to be dealt with in that session," Gibbs said.

Republicans welcomed the developments but expressed caution since the White House hasn't been more explicit.

"I take any signal that the president may be backing off his pledge to raise taxes on small businesses as a good sign, but we have to see where this discussion goes," said Rep. Dave Camp, R-Mich., who will become chairman of the tax-writing House Ways and Means Committee in January.

Even before the election, Democrats were splintered over Obama's plan to raise taxes on people with high incomes. The GOP might win a showdown if it came to that in the current Congress.

The obvious – and perhaps only – way to get an agreement this year is for a one- or two-year extension of all the tax cuts. The incoming Congress and Obama would then have plenty of time to sort it out later.

"There's bipartisan opposition to raising taxes on anybody," said Senate Minority Leader Mitch McConnell, R-Ky. "What I hope we'll do is come together ... and agree to extend the current tax policy for everyone."

McConnell spokesman Don Stewart said the Republican Senate leader is amenable to a two-year extension.

Gibbs reiterated that Obama won't go along with a permanent extension of the upper bracket tax cuts, which would cost about $700 billion over the upcoming decade.

"The president does not believe and I think would not accept permanently extending the upper-end tax cuts," Gibbs said.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

PROPERTY SALES 81 277 20,909
MORTGAGES 85 329 24,074
BUILDING PERMITS 219 672 43,265
BANKRUPTCIES 64 238 13,418