Democrats and Republicans are coming together in opposition to President Obama’s tax increases that he proposed yesterday to pay for his $447 billion second stimulus package. For the last two and a half years, President Obama has been pushing many of these same tax increases, beginning first in 2009. Yet, even with a Democrat Congress in 2009 and 2010, President Obama couldn’t get these tax increases passed. Why? Because even Democrats were opposed to raising these taxes. It seems that opposing Obama’s tax increases might truly be a bipartisan issue. These facts weren’t lost in the morning papers…
In the past, however, Democrats, too, have been wary of the most significant piece of Obama’s tax proposal, the elimination of many tax deductions for the wealthy. When Democrats held Congress, they declined to consider a White House proposal to limit deductions for upper-income taxpayers as a way to pay for health-care reform.
The biggest piece of the payment plan would raise about $400 billion by eliminating certain deductions, including on charitable contributions, that can be claimed by wealthy taxpayers. Obama has proposed that in the past — to help pay for his health care overhaul, for example — and it's been shot down by Republican lawmakers along with some Democrats.
Obama emphasizes that the bill is paid for and incurs no debt, but Republicans — and Democrats, for that matter — oppose his suggestion to raise $400 billion by limiting charitable deductions for wealthier individuals.
But not all Democrats are on the same page on whether to scrap the carried interest exemption, which allows hedge fund managers and private equity investors to be taxed at a 15 percent rate even if they make millions for this income. Some in the party have argued that the exemption needs to be ended as a simple matter of fairness. But Reps. Jared Polis (D-Colo.) and Mike Quigley (D-Ill.) have argued that getting rid of the exemption would hurt the real estate market and other parts of the economy, not to mention stifle entrepreneurship.
Although many of the spending and tax-cut items have had bipartisan support in the past, the tax increases Mr. Obama proposed Monday instead have faced bipartisan opposition and have been rejected by Congress even when it was controlled by Mr. Obama’s own party. … But the ways he offsets those benefits have faced bipartisan opposition. The bill calls for $467 billion in tax increases overall over 10 years, which would fund $447 billion in spending and tax cuts in 2012. Most of the tax increases — $400 billion — would come from limiting tax deductions to the 28 percent level, which hits those who fall into higher income-tax brackets. Mr. Obama has proposed that tax increase in previous budgets only to have it stripped out by Congress.
Budget and Spending Taxes