With the election behind us, it is time for our elected leaders to get back to work. The looming fiscal cliff that was created during the last debt deal is in its final weeks before the emergency provisions become active. The key to a successful resolution lies with taxes, but is a divided Congress ready to compromise? Armed with a new mandate from the voters after the election, President Obama is ready to move forward on a deal that best serves the American people.
The "fiscal cliff" is a series of sharp tax cuts and increases set to begin January 2013. The idea behind this situation was to force both sides to come to a compromise before this cliff is hit. What has been evident over the last two years, is that the key to a deal would be tax increases. Republicans have been reciting the party line that tax increases of any kind will end the conversation, while Democrats have pushed for tax increases on the wealthy as the only starting point for any conversation.
During the campaign, Obama openly campaigned on increasing taxes on the very wealthy. Despite all the money spent in opposition, voters responded favorably. The 10 wealthiest counties in the nation make up about 1% of the popular vote, and Obama won eight of them. This kind of support for the president gives him the political capital to push his agenda of tax increases on the wealthy.
As a result, Republican leaders have expressed a willingness to come to a compromise. After the way America voted, there was no other option for them. Republicans would prefer to raise revenue by closing tax loopholes and lowering the corporate tax rate to spur growth, and Democrats should listen. Lowering the corporate tax rate to encourage businesses to keep their money here is a good idea, as is closing other loopholes in the tax codes that currently lower revenue.
Likewise, Republicans need to be willing to discuss the option of tax increases on the wealthy. When eight of the 10 wealthiest counties vote for the president who wants to increase their taxes, you have to listen. The GOP already has an issue connecting with the American people; do they really want to prevent a deal that protects the millionaires who voted against them? President Obama should concede in this area as well. Currently he wants to increase taxes on those making over $250,000. The numbers prove that Republican claims that this tax will hurt small business owners is untrue. Obama can help Republicans give small business ownersa compromise by raising the minimum income to $750,000.
While the president has a mandate from the voters, compromise is still needed. In order to do what is best for the country both sides are going to have to work together to find a solution. The solution needs to be a combination of spending cuts and increasing revenues, because a balanced approach is always best. The American people will be best served by tax policies that close loopholes and shelters, encourage businesses to keep their money here, and raise additional revenue. The president and members of Congress need to listen to what the voters have said, and come to a deal that best serves the American people.