Republican Cantor opens door to tax hikes

Reuters via Yahoo ^ | July 6, 2011 | Andy Sullivan and Jeff Mason

[BradtotheBone]

WASHINGTON (Reuters) - A top Republican said on Wednesday his party could compromise on taxes as part of a broad budget deal as President Barack Obama warned the United States could spiral back into recession if Congress does not act soon.

Ahead of a Thursday meeting with Obama, House of Representatives Republican Leader Eric Cantor indicated that Republicans could break an impasse over taxes that has held up a deal to avert an early August default.

"If the president wants to talk loopholes, we'll be glad to talk loopholes," Cantor said at a news conference. "Any type of discussion should be coupled with offsetting tax cuts somewhere else."

Cantor's comments open the door to a compromise that would clear the way for Congress to raise the $14.3 trillion debt ceiling before the country runs out of borrowing capacity on August 2.

Failure to act by then could force the United States to default on debt service, retirement payments, or other obligations.

A U.S. default could cause "a whole new spiral into a second recession or worse," Obama told a Twitter town hall on Wednesday.

Cantor declined to say specifically what tax provisions would have to be part of the deal. An aide said possible elements could include an extension of last year's payroll tax break or a research and development tax credit.

[muleskinner]

s/b Reuters via Yahoo

Rueters can be as bad as MSNBC, and is in this case.

[GonzoGOP]

Give me some examples of tax loopholes. Mortgage interest? Depreciation? I guess the federal government has a right to every cent we make. They just must decide who to take it from, how much, and when.

Those would be deductions, not loopholes. Tax loopholes tend to be flaws in the wording of the new law. Also they can be waivers given to a select group allowing them to avoid a tax that the general populace has to pay. For example Google, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, allowing them to dodge 3.1 billion in US income tax. For many years it was possible to change the company car to a company SUV and receive a 50% break as a small "Truck" due to a loophole in vehicle classification.

[FlipWilson]

I know it is fashionable around here to spout the knee jerk “RINO” and “screw the Republicans it is time for a third party” comments but for a moment can we focus on what Cantor ACTUALLY said:

“If the president wants to talk loopholes, we’ll be glad to talk loopholes,” Cantor said at a news conference. “Any type of discussion should be coupled WITH OFFSETTING TAX CUTS SOMEHWERE ELSE.”

My Translation: “Sure dems, we will give you some face saving loophole closures so you can claim victory but it will cost you meaningful tax cuts that actually help business.”

The funny thing about our tax code, ok not so funny, is that it is full of “loopholes” that were nothing more than special interest pork in disguise. If they want to close those in the name of saving face, fine. If we can get actual stimulating tax cuts in return, let’s get them.

[jinglethosekeyes]

I agree with you 100 per cent. Feel sorry for those newly 2010 elected enthusiastic-for-the-Constitution House Reps. And newly elected in 2010 Senators. They are seeing that many of us out here are getting “DONE” with the ones caving and not adhering to the will of their constituents.
If they cave on taxes, I hope we have many new people getting into the House and Senate races for 2012. I can dream, can’t I?

[jinglethosekeyes]

I agree with you 100 per cent. Feel sorry for those newly 2010 elected enthusiastic-for-the-Constitution House Reps. And newly elected in 2010 Senators. They are seeing that many of us out here are getting “DONE” with the ones caving and not adhering to the will of their constituents.
If they cave on taxes, I hope we have many new people getting into the House and Senate races for 2012. I can dream, can’t I?

[jinglethosekeyes]

I agree with you 100 per cent. Feel sorry for those newly 2010 elected enthusiastic-for-the-Constitution House Reps. And newly elected in 2010 Senators. They are seeing that many of us out here are getting “DONE” with the ones caving and not adhering to the will of their constituents.
If they cave on taxes, I hope we have many new people getting into the House and Senate races for 2012. I can dream, can’t I?

[EQAndyBuzz]

I consider tax loopholes those little things that people use tax attorneys for. I don’t consider interest on mortgage a loophole. I do consider taking an empty basement and writing it off as a office a loophole. I don’t consider taking the tax break on a yacht a loophole. But I do consider moving that yacht to another state to claim the tax break a loophole(ala John Kerry)

There are over 67,000 pages in the tax code. I am willing to bet that 99% of that you and I will never see in our lifetime. if you play by the tax code, you shouldn’t have a problem with any of this, rich or poor. However, if you are trying to circumvent the tax code with attorneys playing legal games based on changing of a word or phrase, heck yes that should be closed.

I have no clue how much revenue this would generate. And the president randomly selecting industries for this because it sounds good to the base is not the answer. And I would believe that any “rich mans” tax loophole that they do close probably has been superseded with something else and this will have no impact on anyone. But it sounds good and I doubt the media is going to take the time and peruse 67,000 pages to find what that would be.

Unless it was a republican.

[cranked]

Ball-less and spine-less...not a one of all the politicians in D.C. have them..... =.=

[verity]

Calm down before you suffer a coronary. ;-)

Any improvement in your business?

[Buckeye McFrog]

Republican Party - a defunct American political party which voted itself out of existence in 2011.

[BubbaJunebug]

So you want to let GE keep their loop hole and pay no tax...fine go ahead. Loop holes need to be tightened or closed and the tax code simplified. We have the highest corp tax rate in the free world. So the GE’s of the world keep the money offshore. The rate needs to come down to at least 15%.

I use the loop holes in my own buiness, I pay virtually no US taxes on my business. Why? I take my profits in China since the rates are much lower.

You may think I’m scum for doing that, but I don’t care, It is my money, I earned it, my employees earned it, my company earned it. I employee 1900 plus employees in China, 7 in the US.

Until this government stops it’s anti business tactics I will keep on doing it the way I am.

[LibLieSlayer]

Some... but man this inflation is something else. I truly appreciate your asking! These darn republicans will drive anyone up a wall... after 40 years, I am sick of their lying ways... but then who isn’t? Thanks again FRiend.

LLS

[newzjunkey]

Since so many are running around ignorantly calling for scalps, let me boil this down.

Cantor is saying nothing that Cornyn didn't say the other day.

They'll talk about closing loopholes in the tax code that Obama wants to close (i.e. corporate jets which stimulus did) BUT do it in a "revenue neutral" fashion meaning there would be tax cuts elsewhere. Those tax cuts would be in places to incentivize capitol investment and job creation.

Republican emphasis is on budget cuts.

This isn't about Obama's $200K "billionaires."

[kabar]

Interesting way of phrasing it. "let GE keep their loophole and pay no tax." In other words the government decides how much money a private business can keep. The presumption is that everything belongs to the government and they let us keep the fruits of our labor as they see fit.

I use the loop holes in my own buiness, I pay virtually no US taxes on my business. Why? I take my profits in China since the rates are much lower.

Tax policy should make sense and have an objective, growth of US jobs and increasing investment in the US. It is one thing to assume the government has the right to take our property without limit and another that our tax policy should work to the benefit of this country. I have no problem with you using the existing "loopholes" any more than I should apologize for my mortgage deduction or that 18% of my investment portfolio is in emerging markets, mainly China and India.

The use of the word "loopholes" is unfortunate. It makes it sound like people are cheating or doing something wrong. Many of these "loopholes" exist for good reasons whether it has to do with corporate jets or yachts. They result in thousands of good paying jobs for many Americans. Closing some of them could have unintended consequences.

[kabar]

For example Google, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, allowing them to dodge 3.1 billion in US income tax.

I don't consider these loopholes. They are part of the tax code. Dodge? Since when is adhering to the existing law a "dodge?" How do you propose we address this problem? Eliminate the ability to do this in the current US tax law or change our tax policies to make us more competitive with Ireland, i.e., lower corporate tax rates? If we choose the former, we risk forcing more and more US companies to move offshore. You close the "loophole," but decrease revenue.

For many years it was possible to change the company car to a company SUV and receive a 50% break as a small "Truck" due to a loophole in vehicle classification.

I assume those were real SUVs. The growth of the SUV in the US was really a product of US laws that required cars to meet certain mileage standards. Trucks were exempted and the SUV was classified as a truck. The SUV is one of the most popular vehicles in America. What is your proposal, classify SUVs as cars? What impact would that have on the SUV market? Jobs?

[kabar]

I consider tax loopholes those little things that people use tax attorneys for. I don’t consider interest on mortgage a loophole. I do consider taking an empty basement and writing it off as a office a loophole.

Is it in the tax code that an empty basement qualifies as an office? Or are you talking about tax evasion?

I don’t consider taking the tax break on a yacht a loophole. But I do consider moving that yacht to another state to claim the tax break a loophole(ala John Kerry)

There is no loophole here. If you homeport the vessel in another state that doesn't charge high taxes, it makes sense. Maybe MA should lower its taxes and more yachts like Kerry's would come back to the state. How do you propose MA change its tax laws to capture this loss in revenue?

However, if you are trying to circumvent the tax code with attorneys playing legal games based on changing of a word or phrase, heck yes that should be closed.

It is not circumventing the tax code. If it were, the violators should be prosecuted. There is nothing wrong with "legal games." If the tax code is poorly written, change it. Maybe we should have less rules and regulations and revenue might increase. The more the government tries to micromanage businesses and bleed them dry with taxes, the more they will resist by finding ways around the chains and shackles they have been placed in. Maybe I am nuts, but I believe the fruits of my labor should belong to me and that the less I give to the government the better. Instead, there seems to be the presumption that my property belongs to the government and they will decide how much I can keep.

[tanknetter]

(Cantor stated:) "Any type of discussion should be coupled with offsetting tax cuts somewhere else."

Ok, this caveat does stir something in me. IIRC, something like 50% of the US population (of taxpaying age) don't pay Federal taxes on income that they earn.

That really does bother me, especially since its largely based on income/affluence and represents the worst "soak the rich" (which really means soak the middle class) type of "progressive" tax structure.

In the rest of the cases, where its the affluent who aren't paying income taxes, the "progressive" tax code allows them to shelter their income from taxes through the use of family trusts and the like. IIRC the Kennedys and Rockefellers don't pay anywhere NEAR the taxes they otherwise should because they are rich enough to afford to establish and maintain such trusts.

I think that what the tax code is really missing is tax equability. Not sure whether I favor a flat tax or not (the idea intrigues me somewhat), but I do know that there are a LOT of people on either end of the income scale from me (upper middle class) who SHOULD be paying as fair a share as I am.

[gogeo]

As usual, certain FReepers don't read further than the very misleading headline. Cantor says nothing about tax hikes, and I doubt the rest of the Republicans would go along with any hikes...

(sigh) I think there are many in the US who vote left because their view of the world comes from sources such as this. They are too busy to know for themselves what happens and why.

They get involved with work, family, etc, and disengagement can easily happen...and they aren't well enough informed to know the media is lying to them.

In contrast, this is a conservative website. Any conservative with a brain stem should know that the media lie.

And...the only person less informed than those who rely on the media are those who merely read the media headlines.

Anyone who has the time to post has the time to RTFA.

The Ignoratti take a lot of the joy out of FR.

[EQAndyBuzz]

Fair enough. Can you describe a loophole?

[kabar]

Loophole is a term used by Big Goverment advocates who view any exemption or deduction as a “loophole,” i.e., the government has failed to get its full pound of flesh and can come back for more as needed. According to them, being too rich is a loophole that should be closed.