Politico reported yesterday that Speaker of the House John Boehner (R-OH) has proposed a tax increase in income in excess of $1 million as part of the ongoing negotiations to avert the so-called “fiscal cliff.” In exchange, the Ohio Republican reportedly wants changes to entitlement programs, including cuts to Medicare benefits.
This is the first time that Boehner has proposed raising tax rates, as opposed to just revenue, during negotiations with President Obama. But here’s four reasons why Democrats should still dismiss Boehner’s supposed concession:
1) Taxes on millionaires are going up anyway. As of January 1st, taxes on millionaires — and everyone else — are going to be set back to Clinton-era levels. If Democrats want to raise taxes on millionaires, or on those making more than $250,000 annually, or to set the line at any other income level, there is no need to trade away entitlement cuts to do so. Tax increases are baked into current law already.
2) Moving the line to millionaires costs billions in revenue. According to Citizens for Tax Justice, “Moving the threshold to $1 million is costly. Extending the Bush tax cuts for the first $1 million of a family’s income saves 43 percent less revenue than the savings estimated with a $250,000 threshold.”
3) Entitlements (and other spending) have already been cut. The Affordable Care Act included some $700 billion in cuts to Medicare (without affecting beneficiaries) and the Budget Control Act (which set the “fiscal cliff” in motion) included another $1 trillion in spending cuts, by placing caps on “programs such as defense, education, national parks, the FBI, the EPA, low-income housing assistance, medical research, and many others.” So by agreeing to Boehner’s deal, Democrats would be trading something that is going to happen anyway for something else that they’ve already done.
4) No debt ceiling increase or other measures to help the economy. Boehner’s deal reportedly does not include an increase in the debt ceiling, which would set up another hostage-taking opportunity for Republicans in just a few months. Also, Boehner’s proposal does not include an extension of unemployment benefits — which expire at year’s end for millions of unemployed workers — or the various measures to boost the economy suggested by the administration.