As you’ve probably seen, John Boehner announced today that House Republicans, unhappy with Obama’s latest fiscal cliff offer, will now opt for a Plan B: They will hold a vote on extending lower tax rates for all income up to $1 million. Under this plan, tax rates will only go up on income over that amount.
Apparently it’s a nonstarter for Republicans for tax rates to go up on income between $400,000 and $1 million. Obama’s latest proposal concedes a good deal of ground to Republicans by agreeing to lift the threshold for tax hikes from $250,000 to $400,000, but this isn’t good enough for Republicans — hence their Plan B. Today the White House flatly rejected the latest GOP offer.
Which prompted this from a Boehner spokesman: “After spending months saying we must ask for more from millionaires and billionaires, how can they reject a plan that does exactly that? By once again moving the goal posts, the President is threatening every American family with higher taxes.”
Jed Lewison has some fun with that one. I wanted to add that what’s getting lost here is that Obama’s latest offer actually makes a pretty big concession even to the wealthy. It concedes a good deal more than his previous plan even to those rich people who would get hit by higher tax rates, too, not just to those additional people who would see their lower tax rate extended. Obama’s latest offer would result in a lower tax burden even for those over $400,000 than his original demand would have.
Remember, the tax rates go up only on income above the threshold number. And so, under the president’s latest offer, everyone who makes over $400,000 also gets the lower tax rate extended on all his or her income between $250,000 and that mount. In other words, Obama’s proposal doesn’t just mean extended lower tax rates for everyone between $250,000 and $400,000; it means a lower tax bill for those over $400,000 than his original plan would have produced.
It’s true that under the GOP plan, tax rates go up on those who earn $1 million a year or more. And perhaps that’s a concession, in the sense that even this is a nonstarter for many House conservatives. But whatever the wisdom of this move, Obama made a concession towards the wealthy and towards Republicans that, for the reasons outlined above, is bigger than it appears on the surface. Yet it still wasn’t good enough for House Republicans.