A crucial White House meeting set for Thursday on the fate of Bush-era tax cuts has been delayed until November 30 due to “scheduling conflicts” at the request of Republican congressional leaders.

The postponement of the meeting will increase the uncertainty surrounding the fate of the contentious tax breaks, which will expire for all Americans at the end of the year unless the Obama administration and Congress can strike a deal.

“At the request of Senate Minority Leader Mitch McConnell and House Minority Leader John Boehner due to scheduling conflicts in organising their caucuses, the President’s meeting with bipartisan leaders will now take place at the White House on Tuesday, November 30th,” the White House said on Tuesday.

Although Republicans and Democrats have said that their top legislative priority following the midterm elections is to solve the tax cuts issue, they have been sparring over the details.

On Tuesday, a powerful Republican lawmaker, said Democrats should abandon any plans to separate an extension of Bush-era tax cuts for the wealthy from those for middle-class Americans, or a compromise will not occur in the “lame-duck” session of Congress.

“Decoupling the rates, providing a longer extension for some than for others …is a terrible idea and a total non starter,” Mr Camp, the Michigan representative set to chair the House Ways and Means committee next year, said on Tuesday in a speech before the Tax Council in Washington.

Mr Camp called it “refreshing” that the White House had signalled it might back down on letting the tax cuts for Americans earning more than $250,000 a year expire on December 31, and could potentially support some form of extension for everyone.

But he said Republicans would be “foolish” to accept different treatment for different income categories, which many Democrats have been insisting on.

The most likely outcome remains a temporary extension of current tax rates for all income categories, which Harry Reid, Senate majority leader, said Democratic lawmakers were considering.

But there was still significant political maneuvering and uncertainty on how the negotiations will play out.

The duration of any temporary extension is still undecided, and the income threshold for expiry could be lifted from $250,000, which Democrats and the Obama administration have long proposed, to a higher level of $500,000 or even $1m, which has been suggested by senator Chuck Schumer of New York and has been gaining traction as a potential option recently. But although this might be acceptable to the Democratic leadership and the liberal wing of the party, which has been clamouring against a compromise in recent days, it is unclear whether it would garner sufficient Republican support. Mr Camp’s remarks suggest it might be opposed.

Other potential paths to a deal involve linking` the fate of the Bush-era tax cuts to the extension of unemployment insurance benefits that expire at the end of the month or a series of business tax breaks.

There is also a risk that the talks could break down entirely. Dick Durbin, the Illinois Democrat, said on Tuesday that he was “not very” optimistic that a deal would be struck in the lame-duck session.

Mr Camp was giving his first major policy address since the midterm elections, which will offer him control of the powerful Ways and Means gavel overseeing tax and trade policy.

In his remarks, Mr Camp said preventing taxes from increasing was one of his main priorities but he also swung open the doors to broad-based tax reform that “expands the tax base and lower rates”.

Mr Camp, a member of the bipartisan fiscal commission that is in the midst of delicate talks on recommendations to shrink the US deficit, said tax reform was important because “a broken tax code that impedes growth will fail to generate sufficient revenues even if spending is cut dramatically”.

But he also added: “As the commission continues its work, however, I want to make clear that I do not and will not support a higher level of taxation to sustain a permanent and higher level of spending.”

Mr Camp broadly described an ambition to lower rates while getting rid of tax breaks for individuals and businesses, along the lines of proposals by fiscal commission co-chairs Alan Simpson and Erskine Bowles as well as senators Ron Wyden and Judd Gregg. “ I mean to restore the sanity and simplicity as well as the fairness and flatness to the tax code,” Mr Camp said.

But he added: “I am well aware that this might ruffle those who have used the tax code to benefit particular industries or activities at the expense of economic efficiency, simplicity, and fairness.” A spokesman for Sandy Levin, the current Democratic chairman of Ways and Means, did not reply to a request for comment.

Additional reporting by Stephanie Kirchgaessner

Get alerts on Tax when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article