* CEOs say tax increases a potential solution
* "Fiscal cliff" deal still in making
* Millionaires' group backs boost in estate tax
By Kim Dixon
WASHINGTON, Dec 11 A group of high-profile chief
executives urged President Barack Obama and Republican
congressional leaders on Tuesday to strike a deal to avert the
"fiscal cliff" that could include raising tax rates on the
In a sign the end-of-year deadline is taking on more urgency
for Corporate America, the group suggested raising revenue
"whether by increasing rates, eliminating deductions or some
combination thereof." The group had previously backed extending
tax cuts for all Americans as a stopgap solution.
"We recognize that part of that solution has to be tax
increases," said David Cote, the chief executive of Honeywell
who has been active in Washington on fiscal issues. About 160
CEOs signed the letter under the umbrella of the Business
Roundtable, a non-partisan group of U.S. chief executives.
The CEOs are renewing a push to persuade lawmakers and Obama
to strike a deal to avert the fiscal cliff of $600 billion in
automatic tax increases and spending cuts that could cause a
A major sticking point in the talks is that Obama wants to
let tax rates rise on more affluent individuals. Most
Republicans back extending all tax rates that expire at the end
of the year.
Republicans also want deeper spending cuts than those sought
by Obama and fellow Democrats, particularly on entitlement
programs like the Medicare and Medicaid health plans.
Republican lawmakers in recent days have indicated
willingness to raise some tax rates, if Obama agrees to changes
Talks between Obama and House of Representatives Speaker
John Boehner, the top Republican in Washington, are inching
along, with fresh counteroffers exchanged in recent days.
Boehner on Tuesday said he was "hopeful."
The business leaders said a compromise should include
meaningful changes to programs like Medicare.
"By initiating these reforms simultaneously, and without
undermining the broader reforms both parties believe should be
pursued, you can rebuild the trust needed for our political
system to function and the confidence needed for businesses to
invest in new factories, equipment and employees," they wrote.
Corporate chiefs signing the letter include Jim McNerney,
chairman of the Boeing Company, and Andrew Liveris, chairman of
the Dow Chemical Company. The companies involved represent more
than $7.3 trillion in annual revenues and over 16 million
They said they believed the United States would suffer
significant negative economic and employment consequences if it
went over the fiscal cliff.
The group will soon be running full page ads in national
newspapers and lobbying members of Congress.
SMALL BUSINESS, FAMOUS MILLIONAIRES
The letter prompted some criticism from Republicans and a
business group, the National Federation of Independent Business.
The Republican chairman of the tax-writing House Ways and
Means Committee criticized the group for floating the idea of
higher tax rates.
"Big business may support raising tax rates on small
businesses, but I do not," congressman David Camp said in a
"It's easy for corporate CEOs to say that individual tax
rates ought to be raised; their companies don't pay taxes at the
individual rate," NFIB said in a statement.
Obama wants to raise tax rates on household income above
$250,000. Republicans say this will hurt small businesses.
Companies that are not set up as legal "corporations" can
organize in a different way through the tax code that makes them
subject to individual income tax rates.
The congressional Joint Committee on Taxation, a
non-partisan panel, has estimated that about 940,000 taxpayers
would have net business incomes in 2013 and earn enough to put
them in one of the top two tax brackets.
This number includes sole proprietorships like mom and pop
stores but also much bigger companies known as S-corps that can
be big law firms and hedge funds, for example.
Meanwhile, a separate group of executives who refer to
themselves as "famous millionaires" is pushing for Congress to
boost the estate tax, also a part of the fiscal cliff.
The group, which is backed by Americans for Tax Fairness and
includes former Treasury Secretary Robert Rubin and Vanguard
founder John Bogle, is pushing for lawmakers to raise the
current estate tax rate, while lowering the amount exempted.
"We have a huge budget deficit and every step large or small
to come after that budget deficit is good," Bogle said.
Their proposal is a long shot since it shoots for a higher
amount of estate exemption than that proposed by Obama himself.
The current estate tax is set at 35 percent after a $5
million exemption per person. Obama backs raising it to 45
percent, with a $3.5 million exemption.
The millionaires' group backs a $2 million exemption with a
45 percent rate.