Why the debate over tax revenue isn’t over

The debate over new tax revenue is dead. Long live the debate over new tax revenue.

That more or less sums up the respective positions Republicans and Democrats have staked out in the related fiscal battles over the required spending cuts known as the sequester, the budget, and deficit reduction. When it comes to the American people, the debate is far from settled, with deep divides mirroring the ones that have seized Washington.

(Andrei Tchernov/istockphoto)

(Andrei Tchernov/istockphoto)

First, let’s look at the way the debate has played out in Washington. A consistent sticking point in the economic battles between Republicans and Democrats has been the question of whether new tax revenue should be on the table. Democrats have said they want to add new revenue, and have cited loopholes they believe can be closed.  Republicans, who caved during the recent deal to avert the so-called ”fiscal cliff” that raised tax rates for wealthy Americans, mostly say the tax debate has been resolved.

“The president has repeatedly called for even more tax revenue, but the American people don’t support trading spending cuts for higher taxes. They understand that the tax debate is now closed,” House Speaker John Boehner (R-Ohio) wrote in a Wall Street Journal op-ed published Wednesday.

In remarks on Tuesday aimed at pressing lawmakers to pass a measure that would avert the automatic spending cuts known as the sequester, Obama pointed to Democratic plan “that pairs more spending cuts with tax reform that closes special interest loopholes and makes sure that billionaires can’t pay a lower tax rate than their … secretaries.”

There’s obviously a lot of daylight between the two sides — much like the daylight that exists on the issue more generally. Consider three polls from last month:

* A United Technologies/National Journal poll showed Americans split down the middle on the question of where taxes fit into the question of deficit reduction, with 48 percent saying a mixture of tax increases and spending cuts should be deployed to rein in the deficit, while 49 percent said only spending cuts should be used.

* In a Reason-Rupe poll, two in three Americans said they would support increasing taxes on wealthier households as a means of reducing the nation’s debt, even after being told taxes were just raised in the deal to avert the “fiscal cliff.” The poll also showed there is a clear appetite for spending cuts, with 85 percent saying they would support spending reductions as a way to reduce the country’s debt.

* In an Associated Press-GfK poll, three in 10 Americans said increasing taxes should be the main focus of lawmakers, in order to balance the budget, while 49 percent said the focus should be on cutting government services. Those numbers are nearly identical to the previous poll conducted in late November and early December of last year, a month before the “fiscal cliff” deal that hiked tax rates for wealthy Americans was reached.

What the data suggest is that while Republicans say that the tax debate is over, it’s far from resolved among the public. At the same time, though, winning wide public support for adding new tax revenue isn’t going to be easy for Democrats.

That means the debate is likely to continue, with no clear endgame in sight. And there are some more reasons why neither side is inclined to budge.

Republicans left the “fiscal cliff” debate believing they had new leverage on taxes moving forward. Yes, they had to make major concessions to avert that crisis, but moving ahead, their thinking went, they could force Obama and congressional Democrats to focus on curbing spending.

Obama, meanwhile, is coming off a successful election cycle riding a wave of popularity. And he’s unburdened by the politics of reelection.

At some point soon — like by the end of next week soon — lawmakers will have to decide whether they are going to do anything to avert the soon-to-hit sequester, which is looking likelier to kick in every day. With political arguments to be made for both sides to hold their ground on taxes, it’s easy to see why the government once again finds itself trying to reach an 11th hour deal.

Source : washingtonpost[dot]com


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