Obama should compromise on tax rates for highest earners

[WillK]

... Another alternative, the personal deductions cap, still hits upper-income earners almost exclusively, and actually will likely raise more money--plus might hold out opportunities for better economic growth, a possibility which also would benefit the middle-class, many of whom are now unemployed.

When I read the above, my reaction is to ask how the kool aid tastes.
A deduction cap will neither raise more revenue nor create better opportunities for economic growth. 

[Mr. Morden]

Why not just go over the fiscal cliff and then in early 2013 reinstate the tax cuts for those making less than $250,000?

Why is it necessary to wait until we've reached the "cliff" in 2013 to vote on such a bill?  It could just as easily be done now.  Or is the argument that the House Republicans will refuse to vote for such a bill now, but on Jan. 1 they'll suddenly accept it?

They should start working on it before then and if a deal can be struck before Dec. 31 that would be ideal.  But I am skeptical that will happen.  What I am not for is a subpar deal which shifts the burden onto the middle class just for the sake of getting it done by the end of the year.  And if we signal that we will fold just to meet the deadline, a subpar deal is what we will get.  In the new year, Democrats will have two more senators and a slightly larger handful of House members, giving them a bit more room in negotiations.

The President campaigned for reelection vigorously on this issue.  Polls show the public agrees.  Elections have consequences.

Right, so you are not for no compromise.  You're for a tough negotiating position, in which Obama insists on getting most of what he wants.  That is not inconsistent with what Beet was suggesting in the OP.  And not inconsistent with Obama's opening bid, which is to ask for all of the Bush tax cuts on the wealthy to expire, plus additional revenue to be generated on top of that by limiting deductions:

http://thehill.com/blogs/blog-briefing-room/news/267789-obama-to-push-deficit-plan-that-includes-16-trillion-in-additional-revenue

Obviously the GOP will never agree to that, and they'll negotiate away from that position.  But there will be some sort of compromise of some kind, whether it be before or after Jan. 1.  The way some of the Dems in this thread seemed to be talking, it's like they were against any kind of compromise on any of this, on principle.  But that's absurd.  There's going to be some compromise.

[WillK]

Let's face it, it's not worth all that much. Restoring Clinton-era rates for those making more than $200,000-$250,000 per year only raises $70 billion to $80 billion a year. Capping deductions, raising the capital gains tax while eliminating the carried interest loophole, or raising the estate tax could are other ways to raise revenues from the wealthy. So if this is Boehner's one non-negotiable item, then I would say Obama should be flexible on it, despite his veto threat. What say you all?

I think it would be healthier to keep capital gains taxes lower.

Healthier for whom?    The 1%. -  sure.   The USA - not so much.

[anvi]

... Another alternative, the personal deductions cap, still hits upper-income earners almost exclusively, and actually will likely raise more money--plus might hold out opportunities for better economic growth, a possibility which also would benefit the middle-class, many of whom are now unemployed.

When I read the above, my reaction is to ask how the kool aid tastes.
A deduction cap will neither raise more revenue nor create better opportunities for economic growth. 

Whose kool aid?  Regarding economic growth, I was referring to a deduction cap combined with other measures that were in the first Obama-Boehner deal, the Simpson-Bowles commission and Gang of Six plans.  These other measures have had bipartisan support for a while now.  And if deductions caps aren't going to raise more revenue, why is there Tax Policy Center analysis out there that say they will?    

[Ogre Mage]

Why not just go over the fiscal cliff and then in early 2013 reinstate the tax cuts for those making less than $250,000?

Why is it necessary to wait until we've reached the "cliff" in 2013 to vote on such a bill?  It could just as easily be done now.  Or is the argument that the House Republicans will refuse to vote for such a bill now, but on Jan. 1 they'll suddenly accept it?

They should start working on it before then and if a deal can be struck before Dec. 31 that would be ideal.  But I am skeptical that will happen.  What I am not for is a subpar deal which shifts the burden onto the middle class just for the sake of getting it done by the end of the year.  And if we signal that we will fold just to meet the deadline, a subpar deal is what we will get.  In the new year, Democrats will have two more senators and a slightly larger handful of House members, giving them a bit more room in negotiations.

The President campaigned for reelection vigorously on this issue.  Polls show the public agrees.  Elections have consequences.

Right, so you are not for no compromise.  You're for a tough negotiating position, in which Obama insists on getting most of what he wants.  That is not inconsistent with what Beet was suggesting in the OP.  And not inconsistent with Obama's opening bid, which is to ask for all of the Bush tax cuts on the wealthy to expire, plus additional revenue to be generated on top of that by limiting deductions:

http://thehill.com/blogs/blog-briefing-room/news/267789-obama-to-push-deficit-plan-that-includes-16-trillion-in-additional-revenue

Obviously the GOP will never agree to that, and they'll negotiate away from that position.  But there will be some sort of compromise of some kind, whether it be before or after Jan. 1.  The way some of the Dems in this thread seemed to be talking, it's like they were against any kind of compromise on any of this, on principle.  But that's absurd.  There's going to be some compromise.

We should get most of what we want.   We won the election.  I think that closing tax loopholes for wealthy earners, etc. can be part of the deal but that alone will not be enough revenue.  Tax rates on the wealthy will have to go up.  If the GOP will not agree to a favorable deal, I say we let the Bush tax cuts expire and let the political consequences fall where they may.

http://thehill.com/blogs/on-the-money/economy/267641-poll-most-americans-would-blame-gop-for-fiscal-cliff-failure

Beet’s ideas for getting revenue have merit.  But his apparent belief about the consequences of heading over the fiscal cliff shows a lack of political acumen.  You don’t get what you want by dropping your whip hand.

[opebo]

Personally I see no downside to just letting the Bush tax cuts expire completely.

[anvi]

Personally I see no downside to just letting the Bush tax cuts expire completely.

The across-the-board tax cuts are not the only item in the sequester.  If they were, that would be a slightly different debate.  It's the non-defense discretionary cuts that also have the potential of really doing damage to lots of people, education, housing assistance, food inspection, all that stuff.  it's $500 billion in cuts to non-defense discretionary over ten years, and because those cuts are not spread across the whole budget, that's a big hit for all those programs to take, it's a big hit for the people served by them, and it's not the best thing in the world for the economy at large either.

As far as the tax rates go, I'm in favor of upper-tier tax hikes now (there are a number of different ways to do this) and I'd be in complete support of across-the-board tax hikes they are phased over a stretch of time. If the across-the-board hikes are implemented now, even though it doesn't hit individuals all that hard, it would have some impact on demand and that keeps more people out of work for a longer period.  But the cuts in non-defense discretionary spending that come bundled with the sequester are bad news.

[Franzl]

The problem I have with this is....how long do we continue playing this game with the Bush tax cuts? Every 2 years, they just MUST be extended one more time...

[greenforest32]

The problem I have with this is....how long do we continue playing this game with the Bush tax cuts? Every 2 years, they just MUST be extended one more time...

It shows you who the Democrats really serve when the best they can muster is years of effort to undo/nullify a policy Republicans implemented nearly a decade ago.

[anvi]

What I'm saying, I think what Beet is saying, is, if we're going to raise taxes on upper income earners, and I agree fully that we should, why not do it in a way that raises more revenue?  The "Bush tax cuts" were across-the-board cuts, they lowered the rates for everyone, and if I understand the majority of Dems correctly, they want to keep "Bush tax cuts" in place for 97.5% of the populous.  Why is there such incredible fixation on raising the rates back up if you can get more revenue out of raising taxes on the wealthy by capping deductions?  Given Obama's principles, why does the latter possibility constitute a political loss?

Well, anyway, I'm sure that, if most Dem pressure inside and outside of Congress is for rate hikes, then that will be what's on the table in the negotiations, and we'll either get them or see Congress repeal the sequestration after no deal is reached by January 1st.  But the latter possibility is much more likely, and we'll just keep marching forward without having accomplished anything.  Yay.

[Franzl]

What I'm saying, I think what Beet is saying, is, if we're going to raise taxes on upper income earners, and I agree fully that we should, why not do it in a way that raises more revenue?  The "Bush tax cuts" were across-the-board cuts, they lowered the rates for everyone, and if I understand the majority of Dems correctly, they want to keep "Bush tax cuts" in place for 97.5% of the populous.  Why is there such incredible fixation on raising the rates back up if you can get more revenue out of raising taxes on the wealthy by capping deductions? 

If it were up to me, I think I'd let all the Bush tax cuts expire. I think it's rather odd that we're debating Clinton level tax rates with Republicans as something extremely radical.

Perhaps it would need to be done gradually with the struggöing economy, though.

[○∙◄☻¥tπ[╪AV┼cVê└]

Why not just go over the fiscal cliff and then in early 2013 reinstate the tax cuts for those making less than $250,000?

Why is it necessary to wait until we've reached the "cliff" in 2013 to vote on such a bill?  It could just as easily be done now.  Or is the argument that the House Republicans will refuse to vote for such a bill now, but on Jan. 1 they'll suddenly accept it?

They should start working on it before then and if a deal can be struck before Dec. 31 that would be ideal.  But I am skeptical that will happen.  What I am not for is a subpar deal which shifts the burden onto the middle class just for the sake of getting it done by the end of the year.  And if we signal that we will fold just to meet the deadline, a subpar deal is what we will get.  In the new year, Democrats will have two more senators and a slightly larger handful of House members, giving them a bit more room in negotiations.

The President campaigned for reelection vigorously on this issue.  Polls show the public agrees.  Elections have consequences.

Right, so you are not for no compromise.  You're for a tough negotiating position, in which Obama insists on getting most of what he wants.  That is not inconsistent with what Beet was suggesting in the OP.  And not inconsistent with Obama's opening bid, which is to ask for all of the Bush tax cuts on the wealthy to expire, plus additional revenue to be generated on top of that by limiting deductions:

http://thehill.com/blogs/blog-briefing-room/news/267789-obama-to-push-deficit-plan-that-includes-16-trillion-in-additional-revenue

Obviously the GOP will never agree to that, and they'll negotiate away from that position.  But there will be some sort of compromise of some kind, whether it be before or after Jan. 1.  The way some of the Dems in this thread seemed to be talking, it's like they were against any kind of compromise on any of this, on principle.  But that's absurd.  There's going to be some compromise.

Obama should also propose taxing capital gains and dividends at the same income tax rate as ordinary income.

[WMS]

If it were up to me, I think I'd let all the Bush tax cuts expire. I think it's rather odd that we're debating Clinton level tax rates with Republicans as something extremely radical.

Perhaps it would need to be done gradually with the struggöing economy, though.

[emphasis added]

Seriously, Franzl? While the 2003 Bush tax cuts were quite slanted towards the upper classes, the 2001 Bush tax cuts were much more fair, especially on the working poor and working classes. This utter idiocy of "REPEAL ALL OF THEM!!!!!!!" exposes a position that basically pisses on the workers in the name of yuppie liberalism. As a real goddamn example of this, back during the time of the 2001 tax cuts, I was making between $10,000 and $20,000 a year, and the 2001 tax cuts were a huge boon to me because a new 10% bracket was created for single filers with taxable income up to $6,000, joint filers up to $12,000, and heads of households up to $10,000 [and] the 15% bracket's lower threshold was indexed to the new 10% bracket. Given how harsh the payroll tax bites at those levels (and why don't you damn liberals remove the payroll tax cap, hmm?), the change in tax brackets resulted in quite a proportionate increase in take-home pay.

Why certain liberals (not all of you, just some) have such a hard-on for wiping out every Bush tax cut is beyond me - there were some good things in that first tax cut. Then again, I doubt most of you have ever been in the working class.

For that matter, why certain liberals (and certain conservatives, for that matter) obsess over tax rates and not tax brackets also strikes me as loony, in addition to the lack of attention to reforming deductions (which are the real loopholes) - you lot talk a good game, but you don't produce. Weak tea all around.