Closing tax loopholes could solve problem
After three years of incessant bickering and legislating, debt ceilings and a Super Congress, the federal government has still yet to come to an agreement on where and how to cut $1.2 trillion from the budget. Both parties would like to see spending cut, however, Democrats are hung up on the fact that Republicans are refusing to compromise and raise taxes in order to raise revenues. But there may be a better political and economic solution that the president and Congress should explore.
Both parties are invested in averting the “fiscal cliff” foreseen by Grover Norquist. He originated a pledge to oppose any tax hikes on businesses or individuals that’s been signed by many Republicans in Congress. It’s a tricky situation, and many representatives, including Rep. Peter King and Sen. Lindsey Graham, have jumped ship and abandoned the pledge, opening themselves up to work with leaders across the aisle to avert the cliff, even if it means raising taxes.
But there are ways to raise revenues without raising the marginal tax rate on businesses and individuals. Close the loopholes and deductions, and yes, close all of them. This technically would not violate the simple Norquist Pledge. Taxes could be kept around the same rate, but revenues would naturally increase as a result.
It’s a crazy thought, but it’s more than I see coming out of Capitol Hill at this point. To go over the cliff would spell another recession, something that we can’t afford. Our government needs a solution now.