House Republican Tom Cole Goes Off the Reservation, Endorses Letting Tax Rates Above $250,000 Expire
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In what should be seen as a chink in the armor of the House Republican caucus, Tom Cole, former head of the National Republican Campaign Committee, expressed support for Republicans cutting their losses on taxes by passing an extension of the Bush tax cuts on the first $250,000 of income, and letting them expire above that. This bill has already passed the Senate and would only need House support to reach the President’s desk.
The Oklahoma Republican said in an interview with POLITICO that he believes such a vote would not violate Grover Norquist’s anti-tax pledge and that he’s not alone within Republican circles.
At a meeting of the House GOP whip team earlier in the day, he made the case that Republicans would strengthen their position by joining hands with President Barack Obama now to give most taxpayers what he calls “an early Christmas present” of ensuring their taxes don’t go up on Jan. 1 [...]
“I think we ought to take the 98 percent deal right now,” he said of freezing income tax rates for all but the top 2 percent of earners. “It doesn’t mean I agree with raising the top 2. I don’t.”
Cole’s logic is a bit convoluted, believing that his party could then fight out top tax rates after the fact. But he is right that removing the tax issue would still present them with an opportunity for additional spending and social insurance reforms. They would still have both the sequester and the debt limit – and unemployment insurance and the doc fix and other expiring measures – to fight out. I don’t think that’s a way to get tax rates lower for the rich. But there’s an area of congruence on corporate taxes that could lead to reform. And the additional possibilities for hostage taking exist without the tax issue hanging over their heads. They could appeal to the nature of the President to seek a similar “concession” from the left in exchange for this concession from the right. And they would get his support, in all likelihood.
In addition, backing up on taxes now will lead to a smaller overall increase on the effective rate for the rich. If everything expires, capital gains and dividend taxes rise, the estate tax returns to Clinton-era levels, and some deductions get capped for the wealthy. If Republicans allow rates, which everyone is focused on, to go up, they can probably craft a bill that keeps those other rates, all of which disproportionately affect the rich, constant. So it’s a better deal in the long run than having to pass the bill down the road. Maybe you could get the same deal after January 1, but if you can get it before, why not take it?
But this is a strategic discussion based on the notion that Republicans have a policy desire to, say, lower social insurance costs. Generally, their policy desire begins and ends with taxes on the rich. And the rates discussion dominates that debate. So while Cole recommends the right strategic move here, I don’t know if his counterparts will see it that way.
UPDATE: The fact that the public supports higher taxes above $250,000 by 60-37 could enter into the House GOP thinking here.