Debt ceiling: What Obama wants in taxes

@CNNMoney July 12, 2011: 2:27 PM ET
obama-budget.gi.top.jpg

NEW YORK (CNNMoney) -- Taxes. They've become the most controversial issue in the debt ceiling talks.

Republicans say President Obama wants to enact "job killing" tax hikes "now." Obama says that's not so: He says his tax increases would be targeted so as not to hurt the economy and would not take effect until 2013.

"Nobody has talked about increasing taxes now, nobody has talked about ... increasing taxes next year," Obama said Monday at a press conference.

So what exactly has Obama said he wants?

First, he wants to get rid of some corporate tax breaks enjoyed by oil and gas companies as well as buyers of corporate jets. Together, those changes might generate close to $50 billion in revenue over 10 years. He also wants to restore some Bush-era tax rates for high-income households -- a move that could raise roughly $700 billion over a decade. The Bush tax cuts are set to expire at the end of 2012.

In other words, roughly $750 billion in revenue raisers out of what the president hopes will be a $4 trillion package or "grand bargain" even though it's looking more likely that a final package will be much smaller.

Commentary: Go big on debt ceiling

"Is the package that we're talking about exactly what I would want? No. I might want more revenues and fewer cuts to programs that benefit middle-class families ... My point is, is that I'm willing to move in their direction in order to get something done," Obama said.

The Republican counter to the suggestion that tax increases be included even as a minority portion of a debt-reduction package has been that it would be a "job killer."

"Tax hikes destroy jobs. And the last thing we should be doing right now, at a time of 9.2 percent unemployment, is enacting more government policies that will destroy jobs," House Speaker John Boehner said Monday.

While very high taxes can dissuade businesses from hiring or investing at least in the near term, it's not at all clear how much, if any, job killing would occur if the proposals Obama has acknowledged publicly were implemented.

For one thing, it's not known how many jobs business owners in the top two tax brackets actually create. The IRS collects information on businesses income but not on jobs. And some types of business income -- such as income from rental properties or investment partnerships -- may generate few if any jobs.

Finally, Obama said that he offered to work with Republicans on tax reform that lowered income tax rates in exchange for eliminating most tax breaks.

But he added one caveat: He would only get behind such reform "as long as that package was sufficiently progressive so that we weren't balancing the budget on the backs of middle-class families and working-class families and we weren't letting hedge fund managers and authors of best-selling books off the hook." To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed4.20%4.30%
15 yr fixed3.28%3.30%
5/1 ARM3.53%3.34%
30 yr refi4.18%4.27%
15 yr refi3.26%3.27%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Economic Calendar
Latest ReportNext Update
Home pricesAug 28
Consumer confidenceAug 28
GDPAug 29
Manufacturing (ISM)Sept 4
JobsSept 7
Inflation (CPI)Sept 14
Retail sales Sept 14
CNNMoney Sponsors
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.