Why do Republicans believe our proposal is preferable to the automatic 2013 rate increases? Apart from the fact that our economy could not withstand the almost $4 trillion tax increase, it would directly and adversely affect small-business investment decisions. Business decisions are highly sensitive to the rates of the capital gains, dividends and death tax, as well as marginal tax rates. That’s why Republicans would leave them alone and raise revenue instead by limiting personal itemized deductions and credits that have much less impact on investment decisions by small-business owners.
The point is, it matters both how and how much the government takes from taxpayers.
So it was not some political attachment to the Bush tax cuts that stymied committee success but, rather, the refusal of the committee’s Democrats to acknowledge the inconsistency in claiming to accept the amount and way the Republican plan would raise tax revenue while insisting that the 2013 tax increases (at least those affecting investment decisions) must also occur.
At no time in the negotiations did the Democratic committee members drop their insistence that, one way or the other, any deal had to include a trillion dollars in new taxes. Republicans believe that would kill job creation and economic recovery. In the long run, a strong economy producing more wealth (and, therefore, more tax revenue) is how we will both reduce the deficit and regain the prosperity that all Americans deserve.