Analysis: Boehner opens door to tax hikes, shifts fiscal cliff talks
By David Lawder and Rachelle Younglai
WASHINGTON (Reuters) - U.S. House of Representatives Speaker John Boehner's offer to accept a tax rate increase for the wealthiest Americans knocks down a key Republican road block to a deal resolving the year-end "fiscal cliff."
The question now boils down to what President Barack Obama offers in return. Such major questions, still unanswered so close to the end of the year suggest, however, that no spending and tax agreement is imminent.
A source familiar with the Obama-Boehner talks confirmed that Boehner proposed extending low tax rates for everyone who has less than $1 million in net annual income, meaning tax rates would rise on all above that line.
Under current law, the 36 percent top tax rate is scheduled to expire on January 1, and would automatically go to 39.6 percent. Boehner's proposal would allow that rate to rise as scheduled at a threshold of $1 million - putting it back to where it was during the Clinton administration.
The White House has not accepted the proposal and the source could not confirm any additional talks were held on Sunday between Obama and Boehner.
With just over two weeks before the fiscal cliff's $600 billion in automatic tax hikes and spending cuts are triggered, threatening a new recession, there is little time to craft a comprehensive deal that will satisfy both Democrats and Republicans.
Until the latest Republican offer, made on Friday, Boehner had insisted on extending all of the Bush era's lower tax rates, resisting Obama's demand to let the marginal rates rise on income above $250,000. A rising chorus of business executives also had urged Republicans to agree to this.
Some lawmakers and congressional aides had predicted that Republicans, once serious negotiations began, might try to raise the $250,000 threshold, say to $500,000 or $1 million. They also speculated that Republicans, if forced into a tax rate hike on the upper-income groups, might seek a smaller increase, say to around 37 percent. Continued...