Obama should compromise on tax rates for highest earners

[Beet]

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?

[True Federalist (진정한 연방 주의자)]

If he can get enough elsewhere.  But the deductions that cost the most are also the ones that are most popular and not likely to be touched save via that proposed deduction cap.

[anvi]

Depends on how much he can get in trade, but I doubt whether there is much room on cap gains, or whether it makes lots of sense to adjust that rate either.  But, Beet, are you suggesting that the rates stay where they are in exchange for such concessions?  What about taking out the loopholes and carried interest in exchange for lowering marginal rates to above where effective rates are now?

[memphis]

Obama should not compromise. All the "fiscal cliff" nonsense is way overblown. And the government needs the revenue. The GOP can't be aghast over the deficit and insist on endless tax cuts and war-level military spending. Call their bluff already. On January 1, 2013, you'll see plenty of Republicans calling their Congresscritter, insisting on restoring their tax-cuts, richers be damned.

[Ban my account ffs!]

I'm not nearly as worried about calling their bluff and letting the tax cuts expire/cuts come into effect.  We'll still have time to put together a package after Jan 1st.  This isn't like the debt ceiling.  That's a fiscal cliff if there ever was one.  The "fiscal cliff", as it were, is actually like a fiscal bunny hill that gets gradually steeper.  Starting down it isn't a death sentence as long as you control yourself.  I think it's more a psychological cliff more than anything.

[Beet]

But, Beet, are you suggesting that the rates stay where they are in exchange for such concessions?  What about taking out the loopholes and carried interest in exchange for lowering marginal rates to above where effective rates are now?

I don't think taking out the carried interest loophole or other loopholes I've heard about will raise that much either. But yes, I'm suggesting, let rates stay where they are for everyone, but find the money some other way that essentially taxes the same group of people. The best way to do this is probably to cap personal deductions.

The CBO has projected that if the fiscal cliff goes through, the economy will be sent back into a recession next year. Further, Moody's has promised to downgrade the US's credit rating. You're talking about $700 billion per year in effective austerity; at the same time the payroll tax cuts expire. Middle class incomes would crash. Here in the Washington D.C. metro area, it's being treated as a very serious matter, as there are hundreds of thousands of government and contractor jobs at stake.

[Antonio the Sixth]

Krugman has a powerful argument in the opposite direction.

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[Marokai Backbeat]

I fully expect him to "compromise" on this, but I see absolutely no reason why he should.

[Franzl]

"Compromise" means do what the losers of this election demand?

[Mr.Phips]

Why not move the threshold up to $1,000,000?  Sure, it wont raise as much revenue, but it would please the liberal base and if Boehner wont accept, Obama can go around saying that Republicans dont want millionaires to pay a little more taxes. 

[opebo]

Obama should not compromise.

[J. J.]

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.

[True Federalist (진정한 연방 주의자)]

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.

A modest capital gains tax hike would likely not harm the economy much, but would help the deficit in the short term as people sell to lock in their gains at the older rate.

[DemPGH]

The fiscal "cliff" is positively entirely overblown, and the Bush tax cuts should all expire. We're talking about taxes on the Clinton levels. Clinton levels. Not Nixon, certainly not Eisenhower.

I think Obama, if he has learned anything, wants to make the GOP look like they were willing to protect tax cuts for people over 250K to the extent that they were willing to let them all expire. And I think Obama wants to let them expire - he should. He went go-for-broke on the healthcare law, he should do so for this. It's going to have to happen at some point.

[True Federalist (진정한 연방 주의자)]

As I recall, it's not the tax hikes but the spending cuts that are expected to do the most short term economic damage, especially the defense cuts.

[J. J.]

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.

A modest capital gains tax hike would likely not harm the economy much, but would help the deficit in the short term as people sell to lock in their gains at the older rate.

The short term is basically the next 45-50 days. 

[anvi]

Wow, Beet, I just looked at some figures for how much revenue could be generated by capping itemized deductions at various levels, and the numbers are pretty decent.  Depending on where you place the cap, you could raise revenues in this way by between $130-170 billion a year, and since the top quintile and especially the top 1% of income earners claim the bulk of deductions, doing that would be pretty progressive.  In comparison, assuming current tax rates at all levels are extended, the "Gang of Six" plan called for about $120 billion extra a year, Simpson-Bowles tax reforms would raise about $110 billion a year and Obama-Boehner I got about $80 billion a year.  Good grief, I really had no idea there was that much to be recouped from scaling back itemized deductions.  

[Sbane]

A deduction cap would indeed be a good idea. I hope Obama gets the money out of the 250k+ group one way or the other. He cannot compromise on that. The nation needs it.

[Marokai Backbeat]

"Compromise" means do what the losers of this election demand?

Only when the losers of the election are Republicans.

[t_host1]

 
 Why? Obama sign this/his legislation into law. The vary words spoken here at Atlas by the majority were, “Obamas’ the great, he sure stuck it too all them Tea baggers!” No, what lays ahead is that of the Obama, Reed and democrat making, I mean if anvi is all excited about, it’s diffidently the democrat model. Do you think Obama is going to do anything about Obamacare?  WHY, would you think he would do anything about his shinning accomplishments of sticking it to the tea baggers and the elusive rich? It’s pennies on the dollar of spending; it’s irrelevant in the big picture of things and yet, it will make some feel better even though they will be no better off.
 I’m not looking forward to the furthering entrenchment of capital, risk and the ideas that such requires. With the liabilities, ObamaCare and such, of the individual/employee being weighed on the act of commerce, commerce will stall; it is the simplest fact of physics.

[Mr. Morden]

I don't understand why some Dems here are down on the idea of Obama compromising in the way that Beet suggests.  Beet is talking about keeping the marginal rates at Bush levels, but getting exactly the same amount of revenue from the wealthy as you'd get from the Clinton rates by some other means (capping deductions, or raising other taxes to offset it), in exchange for Obama getting other things he wants (such as rescinding some of the spending cuts in the sequester that he doesn't like).  How is Obama even giving up anything in such a compromise?  Why would he even care that much which taxes are being levied on the wealthy, as long as it's the same amount of revenue?

[anvi]

If we really can get as much, or what even looks like a bit more, revenue from capping deductions as we can from rate hikes and cap gains hikes, then I'd be totally fine with it.  There is after all a lot of economic bang for the buck in keeping cap gains on the low side, and anyone who doubts that should ask Bill Clinton.  I'm not fussy about how we raise necessary revenues, and as long as we can raise them, it makes good sense to go with what is relatively better for the economy as a whole.

[I spent the winter writing songs about getting better]

I agree with Krugman. Especially since "compromise" just means moving the conflict another year or two down the road. Yeah play hardball and let everything expire, then let the Republicans in February look at the poll numbers on their holding the nation hostage to defend lower tax rates for millionaires. This is indeed nothing at all like the debt ceiling thing.

[badgate]

Maybe Obama should hire Mitt Romney's accountant to help with the tax code stuff.

[© tweed]

oh man Beet, you're so up to your eyeballs in numbers you fail to understand the ideological, or literary, implications of soaking the rich... it's the goalposts that matter.  2% here and 3% there and all of a sudden we might be humans again.