Republicans and Democrats both agree that the middle-income portion of the Bush tax cuts should be extended before they expire at the end of the year, a move that would maintain current tax rates on all income under $250,000 and avoid painful tax hikes on middle-class families at the start of 2013. The Senate has already passed legislation to extend those tax cuts, but House Republicans have refused to do the same until Democrats agree to maintain the tax cuts on high-incomes.

With expiration of the tax cuts just 26 days away and Democrats promising not to extend the Bush tax cuts on high-incomes, Sen. Olympia Snowe (R-ME) and “a handful of other Republicans” want the House GOP to pass the middle-income tax cuts right now, the New York Times reports:

Senator Olympia J. Snowe of Maine, who is retiring, joined a handful of other Republicans on Tuesday suggesting that Congress should pass the middle-class tax cut extensions now, then leave the fight over taxes and spending until later. Americans, she said, “should not even be questioning that we will ultimately raise taxes on low- to middle-income people.” Congress could take that off the table “while you’re grappling with tax cuts for the wealthy,” she said.

Snowe joined Reps. Tom Cole (R-OK) and Walter Jones (R-NC) among Republicans who have suggested that the GOP should immediately pass the middle-income extension. Democrats filed a petition yesterday to force a House vote on the middle-income tax cuts, but it has so far garnered no Republican signatures.

While Republican leaders have said they want to extend the entirety of the Bush tax cuts to avoid tax hikes on any Americans, legislation proposed by both House and Senate Republicans this fall allows the expiration of three important tax credits that would result in tax increases on 10 times as many Americans — most of them lower- and middle-class — than the Democratic proposal.

With Republicans balking at the prospect of allowing the Bush tax cuts to expire for the top 2 percent of Americans, Democrats are losing patience. House Majority Leader Eric Cantor (R-VA) said Friday that the House GOP will not hold a vote on a middle-class tax bill that excludes the top income brackets, even though the Senate has already approved one.

In response, House Minority Leader Nancy Pelosi (D-CA) announced Friday that Democrats plan to bring the legislation to a floor vote next week no matter what. The Democrats plan to use a discharge petition, which can force a bill to the floor if it has been stuck in committee for 30 legislative days. In a new statement, Pelosi dared her Republican colleagues to reject the plan to extend tax cuts for 98 percent of the country:

The clock is ticking, the year is ending, it’s really important, with tax legislation, for it to happen now. We’re calling upon the Republican leadership in the House to bring this legislation to the floor next week. We believe that not doing that would be holding middle-income tax cuts hostage to tax cuts for the rich. Tax cuts for the rich which do not create jobs, just increase the deficit, heaping mountains of debt onto future generations.

And so, to that end, we are – we will be introducing, if the bill, if there is no announcement of scheduling of the middle income tax cut, which, by the way, has tremendous support in the Republican Caucus – I think we would get a 100 percent vote on it if it came to the floor. If it is not scheduled, then on Tuesday we will be introducing a discharge petition which you know with – if we get 218 signatures, would bring the bill automatically to the floor. That would mean that we need some Republicans who support middle income tax cuts, to sign on with us.

Watch it:

In order to make a discharge petition work, Pelosi needs 20 Republicans to sign on to the measure. Several Republican legislators, notably Rep. Tom Cole (R-OK), have called for Republicans to accept President Obama’s deal on middle-class tax cuts.

A Republican Congressman is urging the GOP to support legislation extending President Bush’s tax cuts for 98 percent of Americans that will expire if Congress does not act before the end of the year, Politico reports. Rep. Tom Cole (R-OK) told colleagues on Tuesday that by agreeing to President Obama’s approach and providing tax relief for the majority of Americans, the party could honor Grover Norquist’s no-tax pledge and still push for extending the tax breaks for the richest 2 percent of income earners:

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.

Cole’s position is striking because he’s hardly a “squish” — Norquist’s term for a weak-kneed lawmaker — when it comes to Republican orthodoxy. Cole served as chairman of the National Republican Congressional Committee and in other official posts within the party. [...]

“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. Instead, he told POLITICO, Republicans should fight the president over tax rates for the top earners after everyone else is taken care of.

The Senate passed legislation maintaining Bush’s tax cuts for all but the top 2 percent of income earners in July and Obama has urged the GOP-controlled House to support the bill.

The end-of-year package of tax increases and spending cuts brought about by last summer’s debt ceiling deal includes the expiration of multiple tax breaks that benefit the middle class, and allowing those provisions to expire would have damaging effects on consumer spending and the overall economy, according to a report from the White House’s Council of Economic Advisers (CEA) released this morning.

Failure to extend the middle class portion of the Bush tax cuts, along with the failure to patch the Alternative Minimum Tax (AMT), could reduce overall economic growth by 1.4 percentage points and reduce consumer spending by $200 billion in 2013, the report found:

Taking account of these multiple channels, the President’s Council of Economic Advisers (CEA) estimates that allowing middle-class tax rates to rise and failing to patch the AMT could cut the growth of real consumer spending by 1.7 percentage points in 2013. This sharp rise in middle-class taxes and the resulting decline in consumption could slow the growth of real GDP by 1.4 percentage points, which is similar to recently published estimates from the Congressional Budget Office.

To put these figures in perspective, faced with these tax hikes, the CEA estimates that consumers would likely spend nearly $200 billion less than they otherwise would have in 2013 because of higher taxes. This reduction of $200 billion is approximately four times larger than the total amount that 226 million shoppers spent on Black Friday weekend last year, or roughly the amount American families spent on all the new cars and trucks sold in the U.S. in the last year. As Figure 5 shows, this $200 billion reduction would likely be spread across all areas of consumer spending.

Reports from the nonpartisan Congressional Budget Office and Congressional Research Service have backed up findings that allowing the expiration of the tax cuts that benefit middle class families would have perilous effects for the nation’s economy. President Obama has proposed an extension of the Bush tax cuts for incomes below $250,000 while allowing for the expiration of lower rates on incomes above that threshold. Both the CBO and CRS found that the expiration of tax cuts above $250,000 would have little effect on economic growth.

The report also takes into account certain tax credits, such as the Child Tax Credit, that will expire at the end of the year. Senate Democrats attempted to extend the middle-income Bush tax cuts as well as those tax credits earlier this year, but Republicans blocked the bill and chose instead to support legislation that would raise taxes on 10 times as many Americans as the Democratic plan.

Since the election, many Republicans have come out in support of the Bowles-Simpson plan for deficit reduction. For instance, Sen. Lindsey Graham (R-SC) said, “I’m willing to say yes to Simpson-Bowles,” newly elected Minority Whip Sen. John Cornyn (R-TX) called it a “roadmap,” and Sen. Saxby Chambliss (R-GA) said the country should use “the Simpson-Bowles approach.” Senate Minority Leader Mitch McConnell (R-KY) reacted to President Obama’s demand for $1.6 trillion in new tax revenue by saying, “let’s be clear: an opening bid of $1.6 trillion in new tax hikes isn’t serious. It’s more than Simpson/Bowles or any other bipartisan commission has called for.”

However, new report from the Center for American Progress explains that the Bowles-Simpson plan for deficit reduction actually creates almost $500 billion more revenue than President Obama’s budget. If fully enacted, the bipartisan commission’s plan would generate $2.7 billion from tax increases by 2022:

The oft-cited figure is that the Bowles-Simpson plan would raise $1.2 billion in new revenue. However, this misses an important piece of the puzzle: the panel assumed the Bush tax cuts for the wealthiest Americans would expire and create $1.5 billion in new revenue separate from the $1.2 billion found elsewhere.

The bipartisan committee that produced the report, known as The National Commission on Fiscal Responsibility and Reform, was created by President Obama in 2010. Its proposal never made it to Congress, though, because Republican members of the House — led by former Vice Presidential candidate Paul Ryan — voted it down.

– Greg Noth

Soon after President Obama affirmed his intention to let the Bush tax cuts on income in excess of $250,000 expire at the end of the year, Sen. Marco Rubio (R-FL) warned that raising taxes on the wealthiest members of society would “wipe out some small businesses.” At the Atlantic Washington Ideas Forum on Thursday, Rubio acknowledged that Obama’s plan would lower the deficit by 7.7 percent every year, but argued that small businesses were somehow in danger:

The question becomes what problem are you solving and are you willing — are you prepared — to wipe out some small businesses in exchange for seven and a half percent of deficit reduction potentially? I think that’s a bad trade off.

Studies show the Bush tax cuts for the rich do practically nothing for economic growth, and in fact sharpen income inequality. Only 3 percent of small businesses would be affected by the expiration, according to the Joint Committee on Taxation. In fact, small businesses grew twice as fast under the old Clinton tax rates as they did under Bush.

While Rubio may not want to believe these studies, small business owners do; according to a recent poll, 57 percent of small business owners think that raising taxes on the wealthy would do less harm to the economy than spending cuts that would impact education, job training, and infrastructure investment.

Rubio also argued that the tax hike would be pointless, as millionaires and billionaires could simply game the system and “hire the best lawyers, lobbyists and accountants in America to figure out how not to pay those higher rates.” Despite widespread support for tax increases on the wealthy, Republicans are attempting to tie an extension of the Bush tax cuts to a deal to avoid the so-called “fiscal cliff” in early 2013.

Ahead of negotiations over the so-called “fiscal cliff” and what promises to be another fight over raising the debt ceiling, 63 CEOs representing the largest U.S. corporations, including several Wall Street firms, launched a campaign to supposedly “fix the debt.” However, this campaign calls for additional corporate tax cuts by switching the U.S. to what’s known as a “territorial” corporate tax system, along the lines of that proposed by Mitt Romney.

According to a report by Institute for Policy Studies, the corporations involved could gain up to $134 billion in windfalls if Congress approves such a system, which exempts foreign earnings from the U.S. corporate income tax:

– The 63 companies that are publicly held could gain up to $134 billion in windfalls. The biggest potential winner is General Electric, which would earn $35.7 billion on its overseas earnings of $102 billion.

A territorial tax system actually rewards businesses that offshore jobs and investments. Corporate tax rates are already at a 40-year low of just 12.1 percent. Revenue from corporate taxes has plunged, despite a 60-year high in corporate profits.

Seemingly ignoring that over than 3 million more Americans voted for President Obama than Mitt Romney on Tuesday, Congressional Republicans are moving quickly to embrace Speaker John Boehner’s (R-OH) call to adopt a tax “compromise” that is virtually identical to the tax proposal that Romney made the centerpiece of his failed campaign.

The running theme this week is what Senator Chuck Schumer (D-NY) called the “Rumpelstiltskin fairy tale” that the country can increase revenues simply by lowering tax rates:

Sen. Saxby Chambliss (R-GA): On ABC’s This Week, Chambliss said, “Bowles-Simpson said, look, eliminate all these tax credits and tax deductions. You can generate somewhere 1 to 1.2 trillion in additional revenue. You can actually lower tax rates by doing that. And I think at the end of the day, what’s got to happen, George, we’ve got to get this economy going again.

Rep. Tom Cole (R-OK): In a Friday column, House Budget Committee member Cole wrote: “However, raising tax rates is not the only way to increase revenue, nor is it the best way. Speaker Boehner has proposed comprehensive tax reform to raise revenue and lower rates. Eliminating inefficient loopholes and deductions will generate economic growth while creating a simpler, fairer tax code.”

Rep. Kevin Brady (R-TX): In a Wednesday Tweet, House Ways and Means Committee member Brady opined: “Stronger economic growth from tax reform that lowers rates and closes loopholes will generate higher revenue to bring the deficit down.

Rep. Eric Cantor (R-VA): In a letter to his Republican caucus, the House Majority Leader wrote: “What would be best is a fundamental reform of the tax code that lowers rates, broadens the base, makes America’s businesses competitive again, and reduces the burden imposed by taxes on work and investment.”

Rep. Dave Camp (R-MI): In a Wednesday press release, the House Ways and Means Chairman wrote: “There is a better path forward than simply increasing tax rates, and one in which both sides can claim victory. We can address both our jobs crisis and our debt crisis by focusing on tax reform that strengthens the economy. There is bipartisan support for tax reform that closes loopholes and lowers rates.”

Rep. Tom Price (R-GA): On Fox News Sunday, House Republican Policy Committee Chairman Price, a member of both the Ways and Means and Budget Committees, said “We can increase revenue without increasing the tax rates on anybody in this country.”

The non-partisan Congressional Budget Office says there will be no significant negative impact on the economy should the lower rates on the wealthiest Americans be allowed to expire. And the notion that lowering rates will magically create more revenue is indeed a right-wing pipe dream.

New York Sen. Chuck Schumer (D) has made it clear that he doesn’t accept the parameters of Republican leadership’s idea that revenue can be raised by further lowering top income tax rates. In October, he said Congress “ought to scrap” any such plan, and yesterday, he decried the GOP’s “Rumpelstiltskin fairy tale” that cutting tax rates could drive new revenues through dynamic scoring.

The New York Times, however, reported today that Schumer had indicated a willingness to consider a tax plan that keeps the top tax rate at 35 percent, the point it reached after the Bush tax cuts:

Senator Charles E. Schumer of New York, the No. 3 Senate Democrat, extended an olive branch to Republicans, suggesting Thursday that he could accept a tax plan that leaves the top tax rate at 35 percent, provided that loophole closings would hit the rich, not the middle class. He previously had said that he would accept nothing short of a return to the top tax rate of Bill Clinton’s presidency, 39.6 percent.

“If you kept them at 35, it’s still much harder to do,” Mr. Schumer said, “but obviously there is push and pull, and there are going to be compromises.”

Schumer’s full quote, however, doesn’t seem to make that same suggestion. After Schumer told reporters that it was “counter-intuitive” to think substantial revenue could be raised by lowering tax rates, as Republicans have suggested, he was asked about maintaining current rates. Though he conceded that there may be compromise, he didn’t indicate that he would accept such a deal and restated his belief that the election was a clear mandate for raising the high-income rate to Clinton-era levels:

SCHUMER: Well, you know, if you kept them at 35, it’s still much harder to do, but obviously there’s push and pull and there’s going to be compromises. The President’s view, my view, the overwhelming view that we ran on and succeeded on-that exit polls show the American people agreed with us on is let the rate go to 39.6 for the highest-end people.

Schumer has been clear about his insistence on allowing the high-income Bush tax cuts to expire, and despite the New York Times’ report of recent remarks, his position doesn’t seem to have changed.