Obama Already More than Halfway to Modified Romney Tax Plan
Another encouraging signal on fiscal-cliff negotiations, this time from a top Senate Democrat, Chuck Schumer. The New York Times reports:
Senator Charles E. Schumer of New York, the No. 3 Senate Democrat, extended an olive branch to Republicans, suggesting Thursday that he could accept a tax plan that leaves the top tax rate at 35 percent, provided that loophole closings would hit the rich, not the middle class. He previously had said that he would accept nothing short of a return to the top tax rate of Bill Clinton’s presidency, 39.6 percent.
“If you kept them at 35, it’s still much harder to do,” Mr. Schumer said, “but obviously there is push and pull, and there are going to be compromises.”
In truth, this would not be “much harder to do.” By my admittedly non-Nate Silverian arithmetical abilities, it would be about $253 billion harder. Increasing taxes for couples making $250,000 and individuals making $200,000 would raise about $700 billion in revenue over 10 years. The Obama administration has already proposed raising $447 billion over the same period in the fashion that I’ve been discussing, and which became the elusive centerpiece of the Romney-Ryan tax reform plan: capping tax deductions for the wealthy.
Indeed, in September 2011, Obama proposed to offset the cost of his American Jobs Act with just such a scalpel. The Washington Post reported at the time:
During a Rose Garden appearance, Obama pledged to send Congress the American Jobs Act on Monday evening when the legislative body resumes its session. Aides revealed for the first time that the plan will include limits on itemized deductions for individuals who earn more than $200,000 a year and families that earn more than $250,000.
Eliminating those deductions will bring in an additional $400 billion in revenue over 10 years, said Jack Lew, director of the Office of Management and Budget.
The administration also is recommending closing oil and gas tax loopholes and changing the depreciation rules for corporate airplanes. All of the new rules, which would take effect in 2013, would bring in an estimated total of $467 billion, more than enough to pay for the president’s jobs bill, Lew said during the White House’s daily press briefing Monday.
Put it this way: the hurdle that Chuck Schumer describes is in fact not very high at all. Obama could repurpose the $447 billion in cuts to tax expenditures it has already embraced, and then compromise on an additional $253 billion. As for Republicans, I would put it like this: if Mitt Romney had been elected, they were prepared to raise $5 trillion by curbing tax breaks for the wealthy. Obama is asking for $700 billion — and in today’s brief public address at the White House, he did not specify he wants it through higher rates. Add that to Schumer’s earlier signal that Democrats may be able to live with the Bush tax rates.
This should not be hard, people.