Staring down the fiscal cliff, Republicans are calling on a possible compromise with Democrats to increases taxes for Americans earning more than $1 million a year — a policy first championed months ago by House Minority Leader Nancy Pelosi.
The lower tax rates first enacted under George W. Bush will expire at the start of next year, hitting the country with a potential $200 billion tax hike. President Obama was reelected last week on a platform that included keeping the lower income rates for Americans making less than $250,000 a year, which could increase federal coffers by $44 billion next year.
William Kristol, editor of the Weekly Standard and a keeper of the Republican flame, suggested on Sunday that GOP lawmakers chastened by the election returns should agree to a bargain that applies the higher rates to those with incomes greater than $1 million.
“It won't kill the country if we raise taxes a little bit on millionaires. It really won't, I don't think,” Kristol told “Fox News Sunday,” overturning a major tenet of conservative thinking in recent years. “Really, the Republican Party is going to fall on its sword to defend a bunch of millionaires, half of whom voted Democratic and half of whom live in Hollywood.”
Tennessee Sen. Bob Corker also hinted at the need for higher taxes, provided they were matched by reforms to limit entitlement spending and the growth of the national debt.
“I haven't met a wealthy Republican or Democrat in Tennessee that's not willing to contribute more as long as they know we solve the problem,” the GOP senator said. “There's a good, pro-growth way of putting that into place so you are getting revenues from people like me and other folks that make above x dollars.”
Polling throughout the 2012 campaign showed that a majority of country favored raising taxes on Americans who are better off. House Speaker John Boehner, R-Ohio, reiterated the objections of his caucus last week to not continuing the lower tax rates across-the-board, saying higher taxes would choke off economic growth.
Democrats have also expressed concerns about the $250,000 threshold being pushed by Obama. The Democratic Party has a core constituency living along the Atlantic and Pacific coasts, where higher costs of living leave those with incomes well in excess of the national average live middle-class lifestyles.
“We must ask the very wealthiest Americans to pay their fair share,” Pelosi, D-Calif., wrote Boehner in a letter last May. “Democrats believe that tax cuts for those earning over a million dollars a year should expire and that we should use the resulting revenues to pay down the deficit.”
The $1 million level might offer the potential for a compromise, but it would cut by about one-third much additional revenue the government would collect. Instead of an additional $44 billion next year, the federal government would take in $25 billion, according to estimates by the advocacy group Citizens for Tax Justice.