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Defying the Odds

Defying the Odds
New book about the 2016 election.

Thursday, January 3, 2013

Soak the Rich: Been There, Done That

As Steven Sloan reports at Politico, congressional Democrats admit that they’ve exhausted their ability to raise tax rates on the wealthy:
“This does settle the issue of rates for individuals,” Rep. Allyson Schwartz (D-Pa.) told POLITICO. “That’s good. That certainty and predictability is one of the gains” of the fiscal cliff legislation.
Michigan Rep. Sander Levin, the top Democrat on the tax-writing Ways and Means Committee, agreed. When asked whether more rate increases are in the offing, he responded, “I don’t foresee that.”
It’s a significant policy evolution for a party that has been screaming about raising rates on top earners ever since President George W. Bush started slashing taxes in 2001.
Here's the trap.  If they want to raise additional revenue by raising corporate taxes and closing "loopholes," they will collide with their own constituencies.

Further limit deductions for charitable contributions?  The charities -- many of which have liberal orientations and serve the needy -- will push back.

Further limit the deduction for mortgage interest?  That step would disproportionately hit states with high property values, including the Democratic bastions of New York and California.

Raise corporate taxes? The RATE Coalition -- which argues convincingly that corporate tax rates are already too high -- includes many corporations that give substantial amounts to Democrats.

Ironically, the White House insisted on inserting dozens of special-interest tax provisions in the fiscal cliff bill.