Obama and the GOP agree: Eliminate tax breaks for millionaires

During the State of the Union and the Republican response, President Obama and Gov. Mitch Daniels actually agreed on something. Something big. They agreed that millionaires should no longer get tax breaks.

(Joshua Roberts - Bloomberg) “If you’re earning a million dollars a year, you shouldn’t get special tax subsidies or deductions,” said Obama, who credited the idea to Sen. Tom Coburn (R-Okla.). Daniels was on the same page. We should “stop sending the wealthy ... so many tax preferences that distort our economy and do little or nothing to foster growth,”he said. If the apparent agreement here is real, it’s huge. But it went virtually unnoticed amid the fireworks over the Buffett rule.

In a column criticizing Obama’s State of the Union, my colleague Charles Krauthammer wrote “it took Daniels about 30 seconds” to “demolish” Obama’s ideas on taxing the rich, and that Daniels had it right when he said that the way to get the rich to pay more was to “eliminate loopholes from which the rich benefit disproportionately.”

If the two parties could come together around this change to the tax system, it would be a very, very big deal. Coburn’s office estimates that millionaires received $30 billion in tax breaks in 2009. Extend that over 10 years, adjust for economic growth and reductions in interest payments, and cutting out those subsidies would save the Treasury well over $500 billion and while making the tax code considerably more progressive.

In a year in which Congress is widely expected to get nothing done, agreement on this policy would substantially reduce the deficit while simplifying the tax code at the top. It would, in theory, be a win for both sides. Anyone think they’ll actually do it?