Dems Determined to Crack GOP No-Tax Pledge
Policy + Politics

Dems Determined to Crack GOP No-Tax Pledge


Democrats are mobilizing a post-election wish-list of tax policies, which they say will help them dismantle Republicans’ staunch anti-tax hike strategy at the end of the year, when the 2001 and 2003 Bush-era tax cuts expire.

Congressional Democrats have long wanted to siphon off tax cuts to high-income earners, as has President Obama, who promised to repeal them during his 2008 campaign for the White House. But so far, Republicans have handily kept the tax cuts alive, negotiating a two-year extension in 2010 on the argument that their elimination would send the economy back into recession. Then last December, six Republican members of the congressional Super Committee refused to cut a deficit-reduction deal unless Democrats made the tax cuts on the wealthy permanent.

Democrats are optimistically looking ahead to the post-election lame-duck session of Congress as an opportunity to break the tax stalemate once and for all, and back Republicans into a corner. Democrats say both parties’ scramble to avert a $1.2 trillion across-the-board spending cut and the expiration of the 2001 and 2003 middle class tax cuts puts them in a prime position to force Republicans to accept tax increases on wealthy individuals.

“They’ll have no choice. If they don’t back down and agree to something, they will own responsibility for the repeal of tax cuts that benefit the middle class,” said Sen. Sheldon Whitehouse, a Democrat from Rhode Island, in Washington, D.C., Wednesday.  “I don’t think it’s a very good place for them to be in the debate.”

Whitehouse’s logic depends on Obama winning reelection in 2012, which would provide Democrats with extra firepower to overtake Republicans on the expiring tax cuts. But should Republicans win the White House, keep control of the House, or gain a Senate majority, they’ll have zero incentive to compromise in a lame-duck session. 

Earlier this month, Sen. Whitehouse introduced  a new bill to levy a 30 percent “alternative minimum tax” on millionaires along the lines of what President Obama proposed in his State of the Union address, which was first inspired by financier Warren Buffett. Buffett lamented that he paid a lower effective tax rate than his secretary. 

In his 2013 budget, President Obama also called to repeal the Bush tax cuts on high earners. Last week, his administration released a controversial corporate tax reform plan that called to cut the corporate tax rate to 28 percent from 35 percent, but make U.S. multinationals pay part of the bill with a minimum tax on their profits earned overseas.

American voters seem to be warming to the concept of raising taxes on the wealthy, recent poll data shows. Sixty-five percent of voters said they supported millionaires paying at least 30 percent of their income in taxes, according to an Associated Press-GfK poll released last Friday.

Sen. Whitehouse’s millionaire tax stipulates that anyone with adjusted gross income of $1 million or more would pay a minimum of 30 percent of that number in federal taxes.  Democratic Senators Chuck Schumer, Richard Blumenthal, Patrick Leahy, and Tom Harkin have signed on as co-sponsors. The Joint Committee on Taxation is currently scoring the bill to determine how much revenue it could yield. However, a Fiscal Times analysis found that this framework could bring the federal government at least an additional $30 billion in revenue per year.

Whitehouse’s proposal may soon have company. House Minority Whip Steny Hoyer announced earlier this week that he was beginning behind-the-scenes discussions with other House members to formulate a grand deficit-reduction deal before the election. “All options must remain on the table,” including tax increases and reforms to Medicare and Medicaid, he said Monday at a Washington, D.C., press conference. “We ought to be honest about the costs of cutting taxes, and we must do better than just taking the politically easy route. For deficit reduction, we need something bold,” Hoyer said. He also called for tax reform that “raises additional revenues while bringing down rates and reducing preferences.”

According to some Senior Republican staffers, none of these moves will coerce them to accept tax increases. “Democrats trying to talk about Republicans and what they will do on tax policy is kind of like me trying to tell you how my teenage daughter thinks,” said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell. “I wouldn’t put a whole lot of stock in this argument.”