Confirmed: Rep. Eric Cantor (R-VA) Sen. Jon Kyl (R-AZ) walked out of negotiations on the debt ceiling because Democrats are demanding tax increases on the wealthy and corporations via the elimination of tax loopholes. Ezra Klein, emphasis mine:
A bit more information has trickled out over the last few days detailing the exact state of the budget negotiations when they collapsed. Both sides, as they often said, were shooting for about $2.4 trillion in deficit reduction over 10 years. They'd already agreed on around $1 trillion in spending cuts and were making good progress on the rest of it. But Democrats insisted that $400 billion -- so, 17 percent -- of the package be tax increases. And that's when Republicans walked.
Specifically, the Obama administration was looking at a rule that lets businesses value their inventory at less than they bought it for in order to lower their tax burden, a loophole that lets hedge-fund managers count their income as capital gains and pay a 15 percent marginal tax rate, the tax treatment of private jets, oil and gas subsidies, and a limit on itemized deductions for the wealthy.
UPDATE: Not really an “update” persay, so much as an addition. From Raw Story, emphasis mine:
The White House announced today that it is seeking to raise $600 billion in revenue through new taxes and the elimination of corporate subsidies as part of a deal to lower the deficit and raise the debt ceiling.
President Barack Obama is trying to ensure that any spending cuts agreed to are also offset by tax increases — something Republicans have said they will oppose at all costs.
White House Spokesman Jay Carney echoed the calls of many Democratic legislators, saying any deal must include tax hikes or the elimination of subsidies, setting the stage for a showdown with Republicans over the next five weeks.
"It's the only way to get it done," he said.
Here's the list of proposed changes from The Associated Press.
- End some subsidies for oil and gas companies.
- Tax private equity or hedge fund managers at higher income tax rates instead of lower capital gains rates.
- Limit itemized deductions for the nation's highest earners.
- Change the depreciation formula for corporate jets.
- Repeal tax benefit for an inventory accounting practice used by many manufacturers.