Senate Majority Leader George J. Mitchell (D-Maine) said yesterday he would oppose any budget deal that cut the capital-gains tax rate without raising income tax rates for the wealthy.
Mitchell, who last year led the effort that derailed a reduction in the capital-gains tax rate, indicated the point was not negotiable in the current deficit-reduction talks between Bush administration officials and congressional leaders.
"There are certain points beyond which you can't go," he told a small group of reporters.
President Bush and GOP lawmakers are pressing for the cut, whose direct benefit would be greater for upper-income taxpayers than for the middle-class, as part of a budget agreement. Democratic lawmakers have said the price for such a reduction should be raising the income tax rates for the wealthiest taxpayers.
"The middle-class in our society . . . are the people who are paying increasingly, who are shouldering the burden of taxation in our society," Mitchell said. "I don't see how anyone in good conscience can further that trend."
A group of moderate House and Senate Democrats gathered outside the Capitol meeting room where the budget talks were being held to deliver the same message to the negotiators. "Reagan spent the '80s cutting taxes for the rich," Rep. Dave McCurdy (D-Okla.) told reporters. "We can't let Bush begin the '90s by raising taxes on the middle class."
Currently, the marginal tax rate for upper-middle income earners is 33 percent but drops to 28 percent for the wealthiest taxpayers. Democrats want to eliminate this anomaly by raising the top rate.
Mitchell called "completely unacceptable" a proposal to set the marginal rate at either 31 percent or 32 percent for taxpayers in both brackets. The top rate should be at least 33 percent, Mitchell said, preferably 35 percent.
Capital gains are taxed at the same rates. Since 1988, Bush has proposed cutting the capital-gains rate to 15 percent, saying it would stimulate economic growth.
Taxes have not been discussed in any detail in the negotiations and the Democrats and Republicans may have to meet separately in private before they are, according to participants. Last night, lawmakers canceled today's scheduled formal talks.
Yesterday's session of the talks was taken up with a review of previously proposed savings in such programs as Medicare and farm supports, participants said. Office of Management and Budget Director Richard G. Darman is seeking between $11 billion and $12 billion in savings in those areas, but Democratic budget analysts said they would be hard-pressed to achieve $10 billion in savings.
Negotiators expressed worry at the pace of the talks. "We need to see if we can't direct proposals into some channel that will speed our effort to producing results," said Sen. Wyche Fowler Jr. (D-Ga.).