Zachary Goldfarb of the Washington Post reports that President Obama intends to raise more revenue from high-earners than the expiration of the Bush-era high-income rate reductions alone would likely generate. The notion that the president intends to do no more than restore the Clinton-era tax code for the very rich, a key part of his political message since his 2008 campaign, is now firmly in the dustbin:
Obama has said that the election validated his approach to tax policy.
Obama’s previous proposal called for raising $1.6 trillion in new taxes on the wealthy by allowing tax rates to increase, imposing a new special tax on millionaires and limiting deductions for the wealthy. He also proposed $340 billion in health-care and entitlement savings, continuing $1.1 trillion in spending cuts already passed into law and generating another $1 trillion in savings through the end of the wars in Iraq and Afghanistan.
The demand for $1.6 trillion in new taxes is far greater than Obama proposed in negotiations with House Speaker John Boehner (R-Ohio) in summer 2011. At the time, Obama wavered between $800 billion and $1.2 trillion in new tax revenue, depending on how much in entitlement cuts Republicans were demanding. [Emphasis added]
I have been somewhat optimistic that President Obama and congressional Republicans might be able to coalesce around something like the “Obamney tax plan,” in which Bush-era tax rates are frozen while deductions are capped, but my sense is that the president sees a millionaire’s bracket as a political winner. I’d also not be surprised if this proposal secures the support of a few Republican senators. I’ve made the case against a millionaire’s bracket. But for now at least, I think that’s exactly what we’re going to get.
For more on the subject of a millionaire’s bracket, I recommend an analysis by Rachel Johnson and Jim Nunns for the Tax Policy Center.