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?

[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.

[Beet]

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

Because it would raise taxes by $3,700 on middle class families, send the economy back into recession, cost hundreds of thousands of jobs just before/during the Christmas holidays, result in another credit downgrade, and poison relations with Congress. All of these are very bad things. My fellow Democrats, get our heads out of the sand.