To tax now or to tax later?

November 19, 2012

So here's where we are.

President Obama says that he strongly opposes any extension, even a temporary one, for the Bush tax cuts for income over $250,000. If we want to do tax reform, his position is that we first let those tax cuts expire, so that revenue is in the bank, and then we start reforming the tax code from there.

House Speaker John Boehner is circulating a plan to agree to some general revenue and spending targets, pass legislation to delay all the end-of-the-year austerity, and then get to work on the details.


Washington in one photograph. (Jewel Samad / AFP/Getty Images)

This is going to be the central sticking point of the next month: Obama wants to tax now. Boehner wants to promise to tax later. 

Taxing now has a couple of advantages for Obama. For one, it ensures that the question is, "Should we raise taxes on the rich?" rather than the thornier "How should we do tax reform?" For another, the Obama administration doesn't quite trust House Republicans, or Congress in general, to construct a tax reform plan that will raise revenue. They want revenues they can believe in now, because that gives them more leverage to reject tax reforms they don't trust later.

Promising to tax later has a couple of advantages for Boehner. For one, it makes sure the tax revenue isn't locked in before the spending cuts are figured out. For another, it pushes the negotiations out a couple months -- which means they coincide with the next time the country hits the debt ceiling, a crisis that Republicans think will give them added leverage. 

Which is all to say that the disagreement is about exactly what you think it's about: Both sides want the upper hand in the coming fiscal deal.

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Sarah Kliff | November 19, 2012