Yesterday the Republicans put forth a proposal for avoiding the fiscal cliff, and as a bankruptcy lawyer I do not feel comfortable about the state of our economy, if they stick to their guns. They have proposed $800,000,000,000 in tax increases over the next ten years; however, they have claimed that they can find this amount by limiting deductions rather than raising the rates.
While arguably this loophole plugging approach could theoretically work, it requires that someone identify which deductions will be closed, and the Grand Old Party has not bothered to take this step. They just contend that with all the loopholes out there, they can work the details out later, and they want to pretend they do not have to deal with the fact that all loopholes are popular among their own constituencies. They seem to be oblivious to the fact that, if they take away the mortgage interest deduction homeowners will be up in arms, or if they reduce charitable deductions the charities across the country will be lobbying to keep their benefits.
The bottom line is that until the specifics are identified, and the opposition comes to the surface, there is no way to tell, if the so called proposal has a serious chance of passing.
What the Republican proposal has done is create more uncertainty about what the tax law will be next year, which Congress should have learned by now makes it nearly impossible for the job creators in America to make informed investment decisions,
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