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GOP members say tax reform needed

December 4, 2012
By JOSELYN KING - For The Weirton Daily Times , Weirton Daily Times

WHEELING - Republican U.S. House members representing East Ohio and West Virginia say they don't support allowing Bush-era tax cuts to expire for the wealthy at the end of this year. Instead, they favor changes to the federal tax code and reducing tax loopholes.

Work continues in Washington this week to steer the nation away from the "fiscal cliff" - the point after Jan. 31 when 2 percent payroll tax cuts end, new taxes related to President Barack Obama's health care law go into effect and $1.2 trillion in mandatory spending cuts begin.

Rep. David B. McKinley, R-Wheeling, said he doesn't like the term "fiscal cliff." He suggested a more accurate term would be fiscal "cascade" or "slope," as the $1.2 trillion in spending cuts kick in gradually over the next decade at a rate of $120 billion per year.

The national debt currently exceeds $16 trillion.

McKinley noted Congress expected the automatic spending cuts to start in 2013 after last year's "Supercommittee" failed to agree to a plan to curb the nation's spending. But the added variable, he continued, is the expiration of the Bush tax cuts.

"We're looking at the impact the expiration of Bush tax cuts will have on the economy," he said. "Congress is trying to figure out if this will put us into another recession. If the tax cuts expire, everyone's taxes will go up."

If all tax cuts are allowed to expire, that would generate an additional $220 billion annually for the federal government, McKinley said.

A second possibility favored by Obama and congressional Democrats is to allow the tax cuts to continue, but not for Americans earning more than $250,000.

McKinley favors a third option in which the tax cuts would remain for one year while Congress works to change the nation's tax code.

"The maximum revenue achieved by (eliminating the tax cuts for the wealthy) may be $40 billion annually," McKinley said. "The shortage this year was $1.2 trillion. By raising $40 billion (annually), just how much impact does that make in reducing the debt?

"It's great politics, and people are willing to engage in class warfare," he added. "But it isn't good policy."

Obama's most recent proposal includes extending the tax cuts for those earning less than $250,000 annually and a plan for another $50 billion in stimulus spending. He also wants the freedom to raise the nation's debt ceiling without approval from Congress.

Rep. Bill Johnson, R-Marietta, Ohio, called the plan "an absolute absurdity."

"If it wasn't so sad, I would laugh," he said. "Instead I cry. That is not a solution to addressing our nation's fiscal problems. We don't have a problem because we are taxed too much. It's because we spend too much."

Johnson disagrees that Social Security and Medicare should be called "entitlement programs." He suggested a better term is "retirement investment programs."

"The people paid into these programs, now it's the government's responsibility to maintain them," Johnson said. "We have to address all of those if we are going to address the nation's debt problem."

House Republicans put forth a $2.2 trillion "fiscal cliff" counteroffer to Obama on Monday. It calls for raising the eligibility age for Medicare, lowering cost-of-living hikes for Social Security benefits and bringing in $800 billion in higher tax revenue - but not raising rates for the wealthy.

Rep. Shelley Moore Capito, R-Charleston, said a balanced approach of revenue generating and spending is needed to avert the fiscal cliff.

"We need entitlement reform and tax reform, and when we get tax reform we will stop" the fiscal cliff, Capito said. "I don't think we will get tax reform before the end of the year."

She noted she is willing to consider means to generate revenue for the federal government, but added she would not agree to any tax hikes. Instead, Capito said tax breaks for special interests and loopholes in the tax system need to be examined.

"I still think we need to look at everything, and I'm trying to remain open minded," Capito said. "But I want to see the whole package first."

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