Senate Democrats move to raise taxes on upper-income earners

posted at 4:41 pm on July 16, 2012 by Dustin Siggins

On Friday evening Politico reported a tax package intended to keep the Bush tax policies in place for individuals making less than $200,000 annually and couples making $250,000 annually — in addition to patching the Alternative Minimum Tax for one year — is making its way around Capitol Hill. From the article:

The 20-page draft Democratic proposal obtained by POLITICO includes these provisions: a 20 percent capital gains rate on those earning more than $200,000, couples over $250,000; a 20 percent dividend rate on those earning more than $200,000, couples over $250,000; estate taxes would apply to estates worth more than $3.5 million with a maximum rate up to 45 percent; extensions of the American Opportunity Tax Credit for college standouts, as well as an expanded child tax credit and Earned Income Tax Credit for poorer Americans; and a one-year patch for the alternative minimum tax.

None of this is unexpected, but the plan has run into four problems. First, at least two Senate Democrats are standing against the plan:

Sens. James Webb (D-Va.) and Joe Lieberman (I-Conn.) have already publicly stated that they will not support the Obama-Democratic leadership position.

Democratic sources say that two embattled Democratic incumbents, Jon Tester (Mont.) and Claire McCaskill (Mo.), will likely back the plan. Another concern for Reid will be Sens. Maria Cantwell (D-Wash.) and Mark Warner (D-Va.). With only 53 Democrats — and Reid calling for a straight majority vote for any tax proposal — Democratic leaders cannot afford to lose any support.

Back in June it was reported that as many as seven Senate Democrats were hesitant to support this kind of proposal as a stand-alone piece of legislation. I wrote that Republicans should take advantage of this hesitation to immediately call the bluff of Democrats who want to raise taxes on the wealthy. Even with only a few Democrats potentially not backing the plan, this gives Republicans a great deal of strength in coming negotiations.

Second, Democrats keep claiming raising taxes on upper-income earners is critical to help close the gargantuan deficits garnered since 2009. Eliminating the Bush tax policies for upper-income earners would raise just over $800 billion over ten years. Using Congressional Budget Office’s (CBO) expectations on spending over the next decade, that’s a maximum of 1.88% of what we’ll spend over that same time period. Yet, to use the CBO’s static method of tax analysis, the Democratic plan would “cost” $272 billion over one year, over three times what raising taxes on the wealthy would raise. Which, of course, explains why Democrats insist the plan not be considered under PAYGO rules:

The legislation also states “that the budgetary effects will not be entered on the PAYGO scorecard,” meaning its impact on the deficit will not derail the legislation. Tax experts said that Reid and other Democratic leaders fear that going for an even more costly bill could cost them support.

Third, barring a flinch by Speaker Boehner (R-OH), this plan has zero chance of making its way through the House of Representatives. Yet Politico says Reid may want a vote as soon as next week on the legislation — clearly showing the Democrats are gambling voters will support raising taxes on upper-income earners as we go into the August recess and the major push by campaigns before November. While this pseudo-campaigning is going on, however, Reid has ignored his chamber’s lawful duty to pass a budget for the federal government for the third year in a row.

Reid’s abdication of responsibility is the fourth difficulty facing the plan: the 2012 fiscal year runs out in two months and 14 days. The Bush tax policies run out in five months and 15 days. Which means outside of the law, simple math says getting a budget together and passed should be a priority. Which means Republicans have an easy rebuttal to any pressure from Democrats about this plan: let’s have Congress worry about actually doing its job and pass a budget before the end of September. Once that happens, and the military and other important functions of the federal government are funded through the 2013 fiscal year, we can get into the negotiations about taxes.


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Do it Reid, I triple dog dare you!

Night Owl on July 16, 2012 at 4:45 PM

The 20-page draft Democratic proposal obtained by POLITICO includes these provisions: a 20 percent capital gains rate on those earning more than $200,000, couples over $250,000; a 20 percent dividend rate on those earning more than $200,000, couples over $250,000; estate taxes would apply to estates worth more than $3.5 million with a maximum rate up to 45 percent; extensions of the American Opportunity Tax Credit for college standouts, as well as an expanded child tax credit and Earned Income Tax Credit for poorer Americans; and a one-year patch for the alternative minimum tax.

This will absolutely slam the brakes HARD on the economy. People invest money in order to make a capital gain. Capital gains are treated favorably in order to encourage people to make those investments. Poor people don’t build factories, rich people do. Fewer of them will do so with these tax rates.

crosspatch on July 16, 2012 at 4:46 PM

I wish they would just go ahead and tax EVERYONE at 101% of their total wealth and finally get this idiocy over with.

LegendHasIt on July 16, 2012 at 4:47 PM

This also means that anyone selling a house and the gain puts them over 200K is going to pay this higher capital gains rate.

This is absolutely stupid and is an economic IED that is set in order to blow up the economy after Jan 1.

crosspatch on July 16, 2012 at 4:47 PM

Well dingy dong harry, if you had bothered to bring up a budget in the last three years that has been passed in the house sitting on your desk, you might have a point? The d’s are playing chicken with the r’s and by golly r’s do not cave, please! For once in your life r’s in the sentate, think what you ARE doing? It will be on the d’s not you?
L

letget on July 16, 2012 at 4:48 PM

Where’s the budget…?

Seven Percent Solution on July 16, 2012 at 4:49 PM

Isn’t this supposed to originate in the House? Didn’t we just go through this with the ObamaCare ruling? Wasn’t that why the dissent was so angry about Roberts changing this into a tax, because tax hikes are supposed to come from the House as its members are elected every two years, thus being more directly accountable to voters?

My God, do we live in a land governmned by the Rule of Law or have we become a Banana Republc?

jawkneemusic on July 16, 2012 at 4:49 PM

The angry, white, old man in the Senate is acting up again. And America loses.

NapaConservative on July 16, 2012 at 4:51 PM

Reid is a f-ing moron, not that I’m complaining about Dustin or anyone else, but what happened to AP? Vacation?

gsherin on July 16, 2012 at 4:51 PM

It’s about time for the Republicans to call their bluff. This is what elections are all about so just tell Harry and the troops that they’ve had 3 years to submit a budget with their tax proposals and they’ve refused so we’ll see what the electorate thinks about this and move on. The Democrats have been pulling this stuff since Obama got into office and I believe the public is going to be amazed at the extra spending they’ve hidden in the past 3 years because they’ve passed everything by continuing resolution.

Make them eat it Pubs.

bflat879 on July 16, 2012 at 4:52 PM

The angry, white, old man in the Senate is acting up again. And America loses.
NapaConservative on July 16, 2012 at 4:51 PM

Not so much angry as he is insane. I seriously think Dingy is starting to develope dementia.

jawkneemusic on July 16, 2012 at 4:54 PM

Jeeze. Don’t all revenue bills have to originate in the House of Representatives? Maybe my law school professors were wrong. . ..

totherightofthem on July 16, 2012 at 4:57 PM

Like clockwork. Leave it up to Reid to double down on stupid. Please keep it up through October.

Meople on July 16, 2012 at 4:58 PM

…WHAT?…wHAT?…the angry old white fart can move on something?…besides his bowels?….Hey Harry!…Know anything about a law and BUDGET?

KOOLAID2 on July 16, 2012 at 5:00 PM

Thanks Harry, you just turned 17 angry white guys into an entire army.

antipc on July 16, 2012 at 5:02 PM

They must be getting very worried.

jnelchef on July 16, 2012 at 5:03 PM

do we live in a land governmned by the Rule of Law or we have we become a Banana Republc?

jawkneemusic on July 16, 2012 at 4:49 PM

Surprised you have to ask. /s

IrishEyes on July 16, 2012 at 5:03 PM

Where’s the budget…?

Seven Percent Solution on July 16, 2012 at 4:49 PM

Repubs should turn this into a chant. You know, like the lefties are always doing over just about anything.

IrishEyes on July 16, 2012 at 5:04 PM

Jeeze. Don’t all revenue bills have to originate in the House of Representatives? Maybe my law school professors were wrong. . ..

totherightofthem on July 16, 2012 at 4:57 PM

That was under the “old” rules; you know, the ones since, oh, that thing called the Constitution was written. We are now under the “Obama rules”, as in king, dictator, yada, yada, yada.

BHO simply ignores the law and Congress will not call him on it, so Reid figures, why not try it himself?

IrishEyes on July 16, 2012 at 5:07 PM

Are you sure the headline shouldn’t be, “Democrats move to transfer wealth to get re-elected”.

DDay on July 16, 2012 at 5:08 PM

a tax package intended to keep the Bush tax policies in place for individuals making less than $200,000 annually and couples making $250,000 annually —

I thought the Bush tax cuts were only for the Rich?

Herb on July 16, 2012 at 5:09 PM

May I just say: screw you, Nevada, for foisting this fool on the rest of us.

natasha333 on July 16, 2012 at 5:10 PM

I can see that we will need more 2010′s to get the Senate in working operable some kind of order.

nobar on July 16, 2012 at 5:12 PM

crosspatch on July 16, 2012 at 4:46 PM

Go right ahead Dems. Let’s see the brakes get slammed hard on future investmentand when the wheels grind to a halt, the fingers will be pointed at you.

banzaibob on July 16, 2012 at 5:13 PM

May I just say: screw you, Nevada, for foisting this fool on the rest of us.

natasha333 on July 16, 2012 at 5:10 PM

Maybe we should take Obama’s advice and stop going to Vegas.

banzaibob on July 16, 2012 at 5:14 PM

I’m starting to be of the mind to let the Bush tax cuts expire, for everybody.

Over 50% doesn’t pay any income tax at all. Everyone needs to pay they’re fair share. We need tax cuts for the job creators, not tax credits for those not paying any income tax at all.

anotherJoe on July 16, 2012 at 5:14 PM

LegendHasIt on July 16, 2012 at 4:47 PM

this made my day. thank you.

peachaeo on July 16, 2012 at 5:15 PM

The House should simply vote to extend all the tax cuts. This undermines the narrative that the GOP is holding the middle class hostage. The GOP WANTS to keep these tax cuts, it’s the Democrats holding them hostage because they want to repeal the cuts for the top 2%.

TheLastBrainLeft on July 16, 2012 at 5:15 PM

We need to send Congress a message: “Read our lips, NO NEW TAXES”

It looks like I’m going to have to buy more copy paper/ink and give my Fax machine a “tune up”:-) Also, update my Senate/House member lists. Went thru this on the Obamacare protest.

bluefox on July 16, 2012 at 5:15 PM

barring a flinch by Speaker Boehner (R-OH), this plan has zero chance of making its way through the House of Representatives.

In other words the plan has a 100% chance of making its way through the House of Representatives.

bgibbs1000 on July 16, 2012 at 5:17 PM

why doesn’t the government run funeral parlors ? Seriously – people are making profit off of DEAD PEOPLE !!!

/

williampeck1958 on July 16, 2012 at 5:17 PM

President Mondale unavailable for comment.

mouell on July 16, 2012 at 5:17 PM

May I just say: screw you, Nevada, for foisting this fool on the rest of us.

natasha333 on July 16, 2012 at 5:10 PM

Don’t forget that Mr. Reid had a little help from the Republican Elite.

DDay on July 16, 2012 at 5:18 PM

NO talk about any tax legislation until there is a budget… the DIMs have gotten away with that for FAR TOO LONG…

Khun Joe on July 16, 2012 at 5:19 PM

This will absolutely slam the brakes HARD on the economy. People invest money in order to make a capital gain. Capital gains are treated favorably in order to encourage people to make those investments. Poor people don’t build factories, rich people do. Fewer of them will do so with these tax rates.

crosspatch on July 16, 2012 at 4:46 PM

Isn’t money that is invested after tax to begin with? Then whatever gain is made is taxed again at the cap rate?

bluefox on July 16, 2012 at 5:19 PM

Someone on a comment thread long past gave me this.

When they bring up raising taxes…ask him how those taxes change when the deficit will be fixed.

Let em stumble around on that answer for awhile.

ChrisL on July 16, 2012 at 5:21 PM

Now let the Republicans defend tax cuts for the rich while denying tax cuts for the average Americans.
This is absolutely a losing position for the Republicans. Can you imagine one of those Republicans in swing states and districts defending the wealthy while blocking the middle class tax cuts because the rich are being taxed 4% more!!

Salahuddin on July 16, 2012 at 5:22 PM

I’m in complete favor of letting all the tax packages expire, better to pay the piper then keep on borrowing. Paying your bills sucks, but defaulting on your debt sucks a lot more.

Zekecorlain on July 16, 2012 at 5:23 PM

May I just say: screw you, Nevada, for foisting this fool on the rest of us.

natasha333 on July 16, 2012 at 5:10 PM

Don’t forget that Mr. Reid had a little help from the Republican Elite.

DDay on July 16, 2012 at 5:18 PM

And the NRA.

Because of their endorsement of Harry Reid, I cancelled my membership and will not join again until they support candidates who protect ALL my Constitutional rights, not just 2nd amendment.

UltimateBob on July 16, 2012 at 5:24 PM

I’m in complete favor of letting all the tax packages expire, better to pay the piper then keep on borrowing. Paying your bills sucks, but defaulting on your debt sucks a lot more.
Zekecorlain on July 16, 2012 at 5:23 PM

Speak for yourself. They aren’t my bills. And you’re opporating under the assumption that the revenues raised by these tax hikes will go towards the debt. Even if they did, it’s not enough. They have a spending problem. NOT a revenue problem.

jawkneemusic on July 16, 2012 at 5:29 PM

Oh, and HEY HARRY, at least those ‘angry old white men’ are AMERICAN.

Obama is fundraising in … CHINA.

This pathetic whining from the guy who won’t even do his own job… and PASS A BUDGET!

thatsafactjack on July 16, 2012 at 5:30 PM

That is a SUBSTANTIAL marriage penalty. SOB’s.

JustTruth101 on July 16, 2012 at 5:31 PM

jawkneemusic on July 16, 2012 at 5:29 PM

The last calculation I heard was about 10 days of running the government if the Bill passed. I would agree, lets stop spending first and go from there.

DDay on July 16, 2012 at 5:33 PM

Now let the Republicans defend tax cuts for the rich while denying tax cuts for the average Americans.
This is absolutely a losing position for the Republicans. Can you imagine one of those Republicans in swing states and districts defending the wealthy while blocking the middle class tax cuts because the rich are being taxed 4% more!!

Salahuddin on July 16, 2012 at 5:22 PM

Sadly for you, the part of the country who would cheer Reid on, are the same people who are too lazy to get off their butts to work, let alone march in support.

Night Owl on July 16, 2012 at 5:35 PM

go for it Reid, your short sighted tactics will blow up in your face come November

burserker on July 16, 2012 at 5:35 PM

All small business owners need to have a meeting with their employees.
Chart out what raising taxes will do to the business….

At the end of the meeting ask which employe’s wants to quit now and go to
work for Obama….

That really is the choice America.

redguy on July 16, 2012 at 5:36 PM

Now let the Republicans defend tax cuts for the rich while denying tax cuts for the average Americans.
This is absolutely a losing position for the Republicans. Can you imagine one of those Republicans in swing states and districts defending the wealthy while blocking the middle class tax cuts because the rich are being taxed 4% more!!

Salahuddin on July 16, 2012 at 5:22 PM

You either forgot the /sarc tag, or you’re a total nitwit.

How about we let the Democrats defend the fact that 47% of Americans are paying no taxes at all, while the other (roughly half) carries the burden?

You want to talk about “fair share?” Let’s have that discussion.

UltimateBob on July 16, 2012 at 5:38 PM

I hardly care if someone making a minor fortune has to pay a little more.

More important hills to die on than this hair-splitting silliness during this election.

It makes the R’s look like panderers to the petit plutocrats in the MSM.

profitsbeard on July 16, 2012 at 5:40 PM

David Goldstein | McClatchy Newspapers, 13 JUL 2012…

WASHINGTON — A majority of Americans want the Bush tax cuts extended for everyone, despite a strong push by President Barack Obama to eliminate them on higher incomes, according to a new McClatchy-Marist poll.

The lunatic-left d-cRAT socialists are proceeding on TAX INCREASES with the same idiocy dingbat pelosi applied to OBOZOCARE / OBOZOTAX: “If we pass it, Americans will love it.”

Keep it up, lunatics.

TeaPartyNation on July 16, 2012 at 5:41 PM

UltimateBob on July 16, 2012 at 5:38 PM

Its not fair to ask Obama voters to pay taxes.

BobMbx on July 16, 2012 at 5:42 PM

@jawkneemusic so we shouldn’t pay our debts because we can’t be assured that we will pay our debt? If you’re a US citizen their your bill just like if your from Laos and the previous gov’t ran up a debt it’s still yours.

Zekecorlain on July 16, 2012 at 5:43 PM

Salahuddin on July 16, 2012 at 5:22 PM

Come again?

Leftist trolls are obvious trolling leftists.

jawkneemusic on July 16, 2012 at 5:45 PM

I hardly care if someone making a minor fortune has to pay a little more.

More important hills to die on than this hair-splitting silliness during this election.

It makes the R’s look like panderers to the petit plutocrats in the MSM.

profitsbeard on July 16, 2012 at 5:40 PM

Wrong – breads breath – Most of those hit will be small business who pay taxes as individuals.
My suggestion to those small business’s – go get incorporated like tomorrow…..

These tax increase will take the wind out of the economy.
This is only class war fair.
If the democrats wanted more money – they would cut taxes.
But they are too stupid to understand history.

This is the Soviet Union – rebranded under Comrade Obama.

redguy on July 16, 2012 at 5:47 PM

@jawkneemusic so we shouldn’t pay our debts because we can’t be assured that we will pay our debt? If you’re a US citizen their your bill just like if your from Laos and the previous gov’t ran up a debt it’s still yours.
Zekecorlain on July 16, 2012 at 5:43 PM

I have never voted for a big spending politician. So NO they’re not my bills. If you think handing these people more of our money to “pay down the debt” is really what needs to happen, the IRS takes donations. Feel free to “pay your bills”.

Delusional.

jawkneemusic on July 16, 2012 at 5:48 PM

They need to push Reid up against the wall and call his bluff.

GarandFan on July 16, 2012 at 5:50 PM

Consitiutionally, all revenue bills must originate in the House. I know that dingy harry got areound this by using an old passed house measure, gutting it, and using the same number – Typical for the constitutional abuse of the marxist/dhims. Does anybody know the bill number and the whole story?

Old Country Boy on July 16, 2012 at 5:55 PM

They need to push Reid up against the wall and call his bluff.

GarandFan on July 16, 2012 at 5:50 PM

Really, call their bluff!! Let B.O. veto it. Put him and Reid on record rather than caving in to their threats everytime.

bluefox on July 16, 2012 at 5:58 PM

Romney needs to start proclaiming that, if this congress raises taxes or lets tax cut expire, he will insist that the next congress undo any such action or inaction retroactively to January 1st.

Laurence on July 16, 2012 at 6:07 PM

Romney needs to start proclaiming that, if this congress raises taxes or lets tax cut expire, he will insist that the next congress undo any such action or inaction retroactively to January 1st.
Laurence on July 16, 2012 at 6:07 PM

This.

jawkneemusic on July 16, 2012 at 6:14 PM

That is a SUBSTANTIAL marriage penalty. SOB’s.

JustTruth101 on July 16, 2012 at 5:31 PM

Aye, that it is, but what does marriage matter when you have such a big wonderful government to shield you from the world?

slickwillie2001 on July 16, 2012 at 6:49 PM

Boehner and McConnell will cave…. just watch.

ultracon on July 16, 2012 at 7:26 PM

Democrats keep claiming raising taxes on upper-income earners is critical to help close the gargantuan deficits garnered since 2009.

They keep claiming that, but it’s not true.

According to http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/hist01z1.xls,

The worst deficit of the R-R-R House-Senate-Presidency was FY 2004, when
Total Receipts were 1.88 Trillion,
Total Outlays were 2.29 Trillion,
and Total Deficit was 0.41 Trillion

The second part of the Bush Tax Cuts were signed in 2003, and Revenues went UP, not down, but spending under the D-D-D House-Senate-Presidency skyrocketed and by FY 2009,
Total Receipts were 2.10 Trillion,
Total Outlays were 3.51 Trillion,
and Total Deficit was 1.41 Trillion

In FY 2009, the Democrat majority produced the worst deficit in the history of this nation … more than 3 times the size (nearly 3.5 times the size) of the worst deficit of the Republican-majority years, FY 2004.

And while the Democrats want to blame deficits on the Bush Tax Cuts, the Bush Tax Cuts actually INCREASED revenue, and the FY 2009 deficit wasn’t the result of lower revenues (which were 12% larger than FY 2004 revenues 5 years earlier). the FY 2009 deficit was the result of spending that was 53% larger than it had been just 5 years earlier!

That outrageous explosion of deficit spending, done by the Democrat majority, led to a FY 2009 deficit that was more than triple the largest deficit of the Republican majority years!

Eliminating the Bush tax policies for upper-income earners would raise just over $800 billion over ten years.

That is not true.
The Bush Tax Cuts led to higher employment and higher revenues, so it’s logical and easy to understand that the Obama Tax Increases will not “raise” revenues at all, but rather lead to LOWER revenues, due to more jobs lost!

The 2003 Bush Tax Cuts increased employment and increased revenues.
The 2012 Obama Tax Increases would lead to lower employment and lower revenues.

ITguy on July 16, 2012 at 7:43 PM

Reid is going to force a vote that will definitely hurt Tester, McCaskill, Manchin, and Nelson (FL). It could hurt Casey and Brown as well. It will also give the Republicans more ammo to use in the open races in Nebraska, North Dakota, and Virginia.

All of these people are going to fall on their swords to give Obama an ineffectual talking point? It’s just phenomenally stupid.

PetecminMd on July 16, 2012 at 9:01 PM

Bring it on you Communist idiots!! Everything you do will be repealed + more!! We need you to keep the focus on the Senate to fuel the avalanche that is coming in November!!

Marco on July 16, 2012 at 9:56 PM