Two Democrats seeking a compromise on the Bush tax cuts have suggested that a new tax rate be added for Americans making over $500,000 a year. Currently there are tax rates at roughly $250,000 and $375,000. Reps. Bill Pascrell (D-NJ) and Michael Capuano (D-MA) want to add the $500,000 tax bracket and extend that bracket at current rates for one year, while extending the rest of the tax cuts for 5 years. It’s basically a version of the decoupling strategy which the White House and leading Democrats would like to see. They feel this will eventually make it easier to let those tax rates expire.
Which is why Republicans, knowing they have over 60 reinforcements coming into the House by next year, and knowing that they can merely hold the current tax rates for the middle class hostage as long as they don’t decouple them, will never agree to this.
House GOP Whip Eric Cantor (Va.) threw cold water on a proposed plan to “decouple” the tax cuts, authorizing a temporary extension of the cuts for the wealthy and a permanent extension for the middle class, saying, “Taxes shouldn’t be going up on anybody right now.”
Asked on Fox News if Republicans or Democrats will give on the provisions of an extension, Cantor said, “No. I mean, one of the ideas that we’ve seen floated was this decoupling … That is a … signal right then and there that we’re going to raise taxes on small businesses. That’s exactly what we don’t need right now. What we need is certainty.”
There’s a great argument for having more brackets anyway, one that Democrats could win in the court of public opinion if they cared about those things. Right now, there’s enough of an aspirational class that calling people who make over $250,000 a year “rich” (which they are) confuses those who want to get to that point and are wondering why they’re being demonized. But adding in a millionaire’s bracket, or even further up the scale, would isolate the mega-rich from the merely rich, and would make completely clear who Republicans are working for.
Anyway, that appears to be a fantasy-world scenario. The tax cuts will get extended, and it’s likely they’ll all move together. This may not happen in the lame duck session, but it’ll happen eventually.
UPDATE: There’s no question Democrats brought this on themselves. They could have forced a vote on the tax cuts at any point in the past two years.