Big Jim B, leader of the house of representatives and general thorn in the side of the President has made what will certainly be marketed as ” the first step ” towards a deal on the fiscal cliff situation.
Reportedly he has suggested the outline of a deal whereby taxes will be raised for those Americans earning over $1million p/year. This must be accompanied by spending cuts also. Also he points to closing tax loopholes to raise extra revenue. This is a favourite of many a politician as you saw Osborne discussing this in his last budget speech how tough the exchequer is going to get on those that are less than willing with their taxes. This is all well and good but they wont be the first or last politician to wax lyrical about tax evasion and not really get anywhere in the long term. It sure sounds good though.
This is at least a positive sign that they are willing to sit around a table and thrash this out. Now is when both sides of the house need to earn their pay cheque. A line in the sand has been drawn and its up to both parties to give a little and take a little and some serious dog-fighting is going to have to take place over the coming weeks to secure a deal.
Personally I think raising taxes on those that earn $1 million a year is simply not enough, the US needs to go through a tad harsher austerity regime than raising taxes by 4% on the top 1%.
Perhaps if by closing those loopholes Boehner mentioned they opened some other one like for those earning over $1 million taxes would not be raised if they can prove they are creating sustainable employment or investing in US business. If Obama and the republicans are as they claimed ad nauseum during the elections that they are there for the middle class and SME’s then perhaps this would be a way of stimulating investment in small businesses without the need for injecting large amounts of printed cash into banks balance sheet ? Just a thought.