New Poll Shows More Favor Letting Tax Cuts For Top Earners Expire

A new Gallup poll out today reveals that more Americans would support allowing tax cuts for the nation’s most wealthy individuals to expire at the end of the year.

44% of those surveyed said the tax cuts enacted during the Bush administration should be renewed next year for people making less than $250,000 per year, but not for those making more than that. Comparatively, 37% said they would vote to keep the tax cuts in place for all taxpayers. 15% said they would allow all the tax cuts to expire.

The debate in Washington this fall promises to center around the issue of what to do about the tax cuts. President Barack Obama has made it clear that he supports raising taxes on the top two percent of Americans, while keeping in place tax cuts for all other income earners. The Obama administration believes that doing so would generate $700 billion in revenue.

Republicans, however, have unitedly called for extending the cuts for all. According to House Republican Leader John Boehner (R-Ohio), “this would help ease the uncertainty employers and entrepreneurs are facing so they can get back to creating jobs.”

The Gallup poll indicates that views on what to do about the tax cuts fall generally along partisan lines. Among those who said they would vote to extend the complete package of cuts, 54% identified themselves as Republican, compared to just 18% who said they were Democrats. Meanwhile, 60% of Democrats that were surveyed said they favored eliminating the cuts for the wealthy. 32% of Republicans who responded agreed.

Congress will likely take up the issue when it returns to session next week, but immediate action is not expected. The struggle over what to do could take weeks, especially with most lawmakers looking ahead to the November elections. Though the president will continue to call for swift legislation, the White House seems to be acknowledging the ideological battle that will surely occur on Capitol Hill. Just this week, recently resigned OMB Director Peter Orszag urged lawmakers to extend the entire package of cuts.

“[T]he best approach is a compromise: extend the tax cuts for two years and then end them altogether,” he wrote in an editorial featured in the New York Times. “Ideally only the middle-class tax cuts would be continued for now. Getting a deal in Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it.”

Boehner Pitches Two-Year Tax Freeze, Reduced Spending

House Minority Leader John Boehner (R-Ohio) proposed on ABC’s “Good Morning America” Wednesday a two-year tax freeze on current U.S. tax rates, including the Bush tax cuts.

Boehner appeared on the show preluding remarks by President Barack Obama where he is scheduled to speak in the lawmaker’s hometown of Cleveland, Ohio pitching a trio of his own economic proposals. 

The Minority Leader called on the White House as being “out of touch” with the American people and proposed a reduction in next year’s spending to 2008 levels to compliment his tax freeze pitch. 

“If we’re able to do this together, I think we’ll show the American people that we understand what’s going on in the country and we’ll be able to get our economy moving again and get jobs growing in America,” Boehner said.

Boehner’s nationally televised remarks come on the heels of a New York Times Op-Ed submitted by Obama’s Director of the Office of Management and Budget Peter Orszag. In his article, Orszag endorsed the extension of the Bush tax cuts for the wealthiest 2% of Americans for two years before letting them expire. Orszag said that letting the tax cuts expire too soon could deal a heavy blow to an already struggling jobs market.

“Let’s continue the tax cuts for two years but end them for good in 2013,” Orszag said.

Orszag Backs Bush Tax Cuts Extension

Former Director of the Office of Management and Budget Peter Orzag said Tuesday that Congress should work towards extending the Bush tax cuts for two years, at which point he said they end, permanently.

In his first New York Times column, Orszag said he believes the best way to handle the country’s short term jobs problem and a growing deficit for the long term is to temporarily extend the tax cuts set to expire this year.

“In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether,” Orzag wrote.

The former OMB Director also said he believes that higher taxes would reduce consumer spending, severely affecting the demand for products across the boards. While permanently extending these tax cuts would increase the deficit by nearly $3 trillion over the next ten years, Orszag argued that the tax cuts are simply not affordable and, by letting them expire, an already stalled jobs market will be dealt a heavy blow, worsening its status.

Orszag said this is not a time for partisan politics, but rather a time where Congress and the administration need to work together to solve the “One Nation, Two Deficits” problem facing the country.

“Both approaches lock us into a budget scenario out of which there are few politically plausible routes of escape,” Orszag said. “Senate Democrats and Republicans almost never come together anymore, [and] this month, they should fight the dual deficits rather than each other. Let’s continue the tax cuts for two years but end them for good in 2013.”

New Congressional Analysis On Tax Cuts Sparks Debate

Pundits are pointing to new data released by the Joint Committee on Taxation as proof that extending a policy of tax cuts for the wealthiest Americans will saddle the U.S. with more debt.

The study indicates that renewing tax breaks for the top two percent of income earners will add $36 billion to the nation’s debt level in 2011. The cuts, enacted in 2001, and then again in 2003 under President George W. Bush, would grant households making over $1 million a tax cut of roughly $100,000 next year.

Republicans, by and large, have supported the continuation of the cuts, arguing that keeping them alive will make it easier for small business owners to hire. Democrats have countered by accusing the GOP of distorting the definition of ‘small business owner,’ and say the cuts neglect those in need.

In an opinion piece today, The Guardian’s Michael Tomasky accused Republicans of siding with the rich over the middle class. “If it’s for millionaires, it’s good, Period,” he wrote. “It’s never been quite this naked, but there it is.”

Top Democrats agree with Tomasky’s assertion.

“I don’t see any reason why we should renew a tax cut that only gives a tax cut to the wealthiest people in America, increases the deficit, and doesn’t create jobs,” said House Speaker Nancy Pelosi (D-Calif.) in an interview. “That doesn’t make any sense.”

Yet, data also shows that the previous administration’s plan is almost as generous for middle class Americans as the one proposed by President Obama. For example, under the President’s proposal, an individual making between $50,000 and $75,000 per year would receive an average tax cut of only 13 dollars more than he or she would under the Bush plan.

Republicans say allowing the current cuts to expire equates to a giant tax hike.

“The Democratic leadership is looking to push one of the biggest tax increases in American history,” said Parish Braden, a spokesman for the RNC. “Even members of the Obama administration have said raising taxes in this climate is not good for the economy.”

In the end, Congress may base its decision on what to do on the concern over the nation’s mounting level of debt, currently over $13 trillion. In that case, the Obama tax cuts would add $202 billion to the debt next year, compared to $238 billion should the Bush cuts be extended.

Expert Blasts GOP's Economic Freedom Act

By Rob Sanna - Talk Radio News

Economic expert at Citizens for Tax Justice Steven Wamoff said Tuesday that the Republicans’ Economic Freedom Act, informally know as their jobs plan, would be extraordinarily expensive and only provide temprary relief to middle-class Americans. 

The plan permanently eliminates income taxes on capital gains, which provides a huge windfall to wealthy people who rely on return on their investment for income. It also erases the federal tax on property transferred after a person dies via a will.

Speaking at the Center for American Progress, Wamoff said the plan is “regressive” and that it cuts payroll taxes in half for one year, the only portion of the bill which would benefit the middle class and it is a short-lived provision.

Wamoff offered harsh criticism of the right-leaning legislation and said America would be “spinning its wheels if a bill like this were passed.”

He argued that the plan cuts 75% of corporate income taxes by allowing businesses to immediately write off purchases and reduces the regular corporate tax rate from 35% to 12.5%.

All of these changes in the tax code would cost about $7 trillion over 10 years, and Wamoff said if the Bush tax cuts are made permanent, the total cost would be closer to $10 trillion.

House Majority Leader Steny Hoyer (D-Md.) described the plan as “more of the Bush policies warmed over.”

“Americans don’t want to go back [and] they don’t want to return to the failed policies of the Bush administration,” Hoyer said. “They want to go forward, and very frankly we think the progess we have been making, and which we need to build on, are what the American public are going to vote on in November.”