True, right now in liberal-land, there’s consternation that the deal will be horrible. As I’ve suggested, if we get what’s currently being advertised-$400,000 floor on higher taxes($500,000 for married couples)-it’s a pretty good deal, even if the Dems give the GOP the lower rate on inheritance taxes-provided the capital gains and dividend taxes also go up to Clinton rates.
Again, keep in mind that proviso. I don’t think it’s so bad compromising on the inheritance tax-though it’s not my preference-if we do get tax hikes for the rich on capital gains and dividends in addition to the raise in individual rates. If the GOP were able to keep those as well as the estate tax, then I’d agree it’s a cave.
This GOP source mentioned in the title, thinks there will be a deal, though it could possibly wait till January 2; however, it’s when not if, according to him. The headlines keep changing, but at present the latest according to HuffPo is revenue of $715 billion:
“The details for the deal, which still is being tinkered with, were passed along to The Huffington Post by a source with direct knowledge of the talks. While progressive lawmakers and pundits have bemoaned some of the details, some top Hill aides seemed increasingly bullish on the prospect of closing a deal before the day was through.”
“Under the framework, the Bush-era tax cuts would be extended permanently for individuals at $400,000 and joint filers at $450,000. A second Senate Democratic source familiar with the state of play confirmed those details. The top rate on ordinary income would go back to 39.6 percent and raise an estimated $370 billion in revenue over 10 years.”
“The same thresholds would be applied for capital gains and dividends, with the top rates in that case going up to 20 percent — a concession to Republicans (the rate on dividends was set to return to 39.6 percent) but not far from the president’s position during the campaign.”
As you can see this is right in line with my framework. I maintain that’s a good deal. The question of sequestration remains a problem. Some GOPers yesterday were complaining about a Democratic proposal to put 50% of the new tax revenue towards offsetting the sequestration through 2014.
“An outstanding issue remains as to what to do with the $1.2 trillion in sequestration-related cuts that are triggered on Jan. 1, with the parties arguing over how long to stave off the cuts, and whether and how to offset them.”
Many Dems argue this is a bad deal-bargaining away new revenue for a temporary fix that the Republicans have an incentive to stop as well-the same criticism applies to reports that the Dems are offering a “Doc Fix” as part of negotiations.
According to the current report the estate tax will be raised, though only slightly:
“The estate tax, which had been a sticking point, will be raised slightly. Currently, it stands at 35 percent on a $5 million threshold. That would be raised to 40 percent, again on a $5 million threshold, which would raise an estimated $25 billion in revenue over 10 years.”
There will also be a reduction in deductions for high earners:
“Taxes benefits would also decrease for high-income earners, with respect to their personal exemptions and itemized deductions. Under the deal being negotiated, the personal exemption phase-out would be capped at $375,000 for individual filers and $425,000 for joint filers. The limitation on itemized deductions would be set at $250,000 and $300,000 respectively. What this means, in basic terms, is that above those income levels, the value of exemptions and deductions goes down and the tax bill paid by those taking the exemptions and deductions goes up. These provisions would raise an estimated $185 billion over 10 years.”
“The deal being negotiated would, in addition, include a permanent patch to the alternative minimum tax, which was designed to ensure that the wealthy paid a share of taxes, but could engulf millions of middle class earners if left untouched.”
“The deal would include a five-year extension of stimulative tax policies, such as the Earned Income Tax Credit, the Child Tax Credit and the college credit expansions. There would be a one-year extension of the 50 percent bonus depreciation provision introduced in the American Recovery Act, which enables small businesses to deduct up to $250,000 of the cost of machinery and other equipment.”
“There are still major areas of disagreement to be negotiated. For example, the deal calls for a one-year resolution to the so-called doc-fix, which adjusts the amount of money doctors receive for taking Medicare patients. But as of Monday morning, there was no agreement on how to pay for it.”
There will apparently be an extension of unemployment benefits.
“Both sides had also agreed that unemployment insurance should be extended one year, affecting an estimated 2 million recipients. But again, there was a dispute over how to cover the $30 billion cost.”
Overall, this doesn’t sound like a cave, though it is to be bemoaned that apparently there’s no payroll tax extension. Shows the GOP doesn’t really care about tax cuts that don’t benefit the rich.
If the sequestration is left in place this is also to be bemoaned. Yes, I wish we could deal with the debt ceiling right now but it’s clear there’s no time for everything-and we don’t know what’s been discussed there. You have to let the GOP feel they won something. Many, like Tom Cole are basing their support for raising taxes on the rich with the carrot that they’ll be able to get some spending cuts later. I think they’ve actually overestimated “leverage” they have with the debt ceiling: they forget what a hit the Republican brand took during that game of debt ceiling chicken. I suspect that if they try to force in the kind of Medicare cuts, et. al, that Romney ran on-and lost-by forcing a hostage situation every month over the debt ceiling they could really hurt themselves even further than they did in the first round.
Finally, that many liberals are bemoaning this deal-without knowing the details-is probably a good thing. It might help get more House Republican votes-making them think it’s a good deal for them.