Divisions Among CEOs, Republicans on Tax Rates Grow
The usual solidarity on tax policy — tax cuts early and often — between and among Republicans and Big Business is showing serious signs of breaking down. A growing number of CEOs and Congressional Republicans are calling for an immediate extension of middle class tax cuts, higher tax rates for the wealthiest Americans, or both.
CEOs Break with GOP Leaders
- FedEx CEO Fred Smith, a Republican who has contributed tens of thousands of dollars to Republican candidates, said yesterday that the conservative argument that higher tax rates on the wealthy kills jobs is “mythology.”
- Several major defense contractors have endorsed both additional defense spending cuts and higher tax rates for the wealthy:
David Langstaff, CEO of TASC, said that the executives were speaking out because so far leaders of the defense industry were “talking a good game, but are still unwilling to park short-term self-interest.” After the event, he told a defense reporter for Politico that tax rates need to go up.
“In the near term, [income tax rates] need to go up some,” Langstaff said. “This is a fairness issue — there needs to be recognition that we’re not collecting enough revenue. In the last decade we’ve fought two wars without raising taxes. So I think it does need to go up.”
- A group of CEOs from companies including Deloitte, AT&T, and Goldman Sachs met with the president last week and endorsed higher tax rates for the wealthy. Goldman Sachs CEO Lloyd Blankfein said, “if we had to lift up the marginal rate, I would do that.” “There needs to be some revenue element to this, and (Obama) started with rates. And [the president] started with rates on what we would define (as) the upper two percent. … That we have to pay our fair share. And I think everybody was in agreement with that notion,” said the CEO of Deloitte following the meeting.
- Roger Altman, the executive chairman of Evercore Partners, an international investment banking advisory firm, co-authored the highly progressive tax reform plan we discussed in this space yesterday.
- John Engler, the former Republican governor of Michigan and current president of the Business Roundtable, an organization of CEOs, recently called for the debt ceiling to be extended for five full years. By contrast, Congressional GOP leaders want to take the economy hostage again early next year in order to demand draconian cuts to entitlements and the GOP’s tax pied piper, Grover Norquist, has called for monthly or even weekly votes on the debt ceiling.
Rank-and-File Republicans Break with GOP Leaders
- Sen. Tom Coburn (OK) said today that he would prefer to raise tax rates rather than close loopholes and limit deductions, as Boehner as proposed.
- Sen. Olympia Snowe (ME) said, we “should not even be questioning that we will ultimately raise taxes on low- to middle-income people.” Snowe urged immediate passage of a bill extending middle class tax cuts.
- Rep. Tom Cole (OK), who led the House GOP’s election arm from 2006 to 2008, was one of the first top Republicans to break with leadership. In a private leadership meeting, he urged Republicans to immediately pass a middle class tax cut extension and fight about the rest later.
- Rep. Kay Granger (TX) joined with Cole, saying an immediate extension of middle class tax cuts is “just the right thing to do.”
- Reps. Mary Bono Mack (CA) and Bob Dold (IL) also joined with Cole in advocating an immediate extension of middle class tax cuts.
- Rep. Walter Jones (NC) said yesterday that if there’s no progress toward a deal by the end of next week, he may join with Democrats in signing on to a procedural move that would allow them to bring a middle class tax cut-only bill to the House floor over the objections of Speaker John Boehner (R-OH).
- Rep. Mike Simpson (ID) went even further than his colleagues regarding tax rates for the wealthiest, saying, “I wouldn’t have a problem with letting those tax rates go up.“
- Reps. Steven LaTourette (OH) and Charlie Bass (NH) said they would support higher taxes on the wealthy if paired with deficit reduction through spending cuts, which is precisely the balanced approach advocated by the president.
- Nearly four dozen Republican House members wrote a letter to Boehner calling on him to put “all options” on taxes on the table.
BOTTOM LINE: The president is holding firm on his insistence that tax rates for the wealthy must increase, as he should given the mandate he won on this issue in the election. Meanwhile, the bottom is falling out from under GOP leaders as their anti-tax coalition begins to crumble.
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