US REPUBLICANS are expected to agree to raise tax rates on the wealthiest to secure a deal by year-end to avoid the “fiscal cliff”, treasury secretary Timothy Geithner has predicted.
Geithner, who is leading president Barack Obama’s administration’s fiscal cliff negotiations, insisted that tax rates on the richest needed to go up in order to reach a deal, a step Republicans have so far resisted. However, he dismissed much of the contentious rhetoric from previous weeks as “political theatre”.
He said: “The only thing standing in the way of [a deal] would be a refusal by Republicans to accept that rates are going to have to go up on the wealthiest Americans. And I don’t really see them doing that.”
The comments mark the latest round of high-stakes gamesmanship focusing on whether to extend the temporary tax cuts that originated under former president George W Bush beyond their 31 December expiry date for all taxpayers, as Republicans want, or just for those with incomes under $250,000 (£156,000), as Obama and his fellow Democrats want.
Republicans, who control the House of Representatives but are the minority in the Senate, have expressed a willingness to raise revenues by taking steps such a limiting tax deductions. However, most House Republicans refuse to back higher rates, preferring to raise revenue through tax reform.