Dems disagree over higher tax rates

Dems disagree over higher tax rates

Rep. Nancy Pelosi’s (D-Calif.) doubling down on a $1 million threshold for extending the Bush-era tax rates has relaunched the thorny Democratic debate over who should pay higher taxes.

Despite Pelosi’s full-throated endorsement that the breaks should be extended on all income below $1 million, Democrats have hardly coalesced on a figure, with President Obama still pushing for a $250,000 threshold and Senate Democrats indicating Thursday that they're all over the board.

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The budget drawn up by House Democrats earlier this year also included the $250,000 threshold.

Sen. Charles SchumerCharles SchumerCongress urges Trump administration to release public transit funding Overnight Tech: FCC begins rolling back net neutrality | Sinclair deal puts heat on regulators | China blames US for 'Wanna Cry' attack Sasse dominates Twitter with Schumer photo, 'reefer' caption MORE (D-N.Y.), who has long backed cutting off the tax breaks at $1 million, conceded Pelosi’s move — intended to push back at Republicans — is just the latest step in the party's search for an effective tax-messaging strategy ahead of November's elections.

“What's more important than the number is the specific strategy we have for over the summer, given [that] the House is going to send us a full [extension] of the tax cuts,” he said, referring to House Speaker John BoehnerJohn BoehnerBoehner called Trump about signing government funding bill Ex-GOP rep jests he thought reporter's accidental text was a drunk text from Boehner Gowdy front-runner to be next Oversight chairman MORE's (R-Ohio) vow to pass a tax-cut extension for all income levels before the elections.

“The big debate in our caucus is going to be ‘what’ and ‘when’ we can do on taxes,” Schumer added, “and that hasn't been decided yet.”

That the strategy remains undecided becomes clear with a simple survey of Senate Democrats.

Sens. Dick DurbinDick DurbinCongress urges Trump administration to release public transit funding Dem senator compares Trump to Blagojevich Rosenstein: I stand by Comey memo MORE (Ill.) and Jack ReedJack ReedDem senators push for probe of Sessions over Comey firing Overnight Finance: Trump floats tying tax reform, infrastructure | Trump trade rep confirmed | Dems raise concerns over banking regulator | House to kick off tax reform hearings Overnight Regulation: Senate GOP looking at how to repeal ObamaCare insurer rules | Dems raise concerns over bank regulator MORE (R.I.) told The Hill on Thursday that Democrats should continue to follow the president's lead at $250,000. Sen. Sheldon WhitehouseSheldon WhitehouseLawmakers vow to move ahead with Russia probes Senate panel advances Trump's appeals court nominee Rosenstein to be grilled today on Trump bombshells MORE (R.I.) noted that, as a member of the Budget Committee, he'd backed a 2011 plan to adopt a $500,000 cut-off for single taxpayers.

And Sens. Mark BegichMark BegichPerez creates advisory team for DNC transition The future of the Arctic 2016’s battle for the Senate: A shifting map MORE (Alaska) and Robert MenendezRobert MenendezThe Mideast-focused Senate letter we need to see Taiwan deserves to participate in United Nations The way forward on the Iran nuclear deal under President Trump MORE (N.J.) both say they prefer the $1 million threshold.

“It makes a clear bright line,” Menendez said. “Everybody knows if they're a millionaire or not.”

Still other Democrats have different ideas. Sen. Jeff MerkleyJeff MerkleyRussia probes in limbo after special prosecutor announcement Special counsel appointment gets bipartisan praise Lawmakers unveil bill to combat Sessions' push for tougher sentences MORE (Ore.) suggested he'd support either the $250,000 or the $1 million cut-off, arguing both would protect the working class. And Sen. Dianne FeinsteinDianne FeinsteinFlynn refusal sets up potential subpoena showdown No. 2 Senate Republican downplays holding contempt vote on Flynn Congress urges Trump administration to release public transit funding MORE (Calif.), though still undecided, said she's weighing “whether the Bush tax cuts should just be eliminated … across the board” in order to prevent cuts to safety net and other federal programs.

“The degree to which the tax cuts ending gives us an ability to save things that are vital, I think, has to be looked at,” she said. “We clearly can't cut $4 trillion.”

With the Bush-era tax rates scheduled to expire at the end of the year, leaders in both parties are scrambling to get the upper hand in the debate over how — or whether — to extend them. Republicans want to maintain the lower rates for all income levels — the proposal BoehnerJohn BoehnerBoehner called Trump about signing government funding bill Ex-GOP rep jests he thought reporter's accidental text was a drunk text from Boehner Gowdy front-runner to be next Oversight chairman MORE is expected to pass later this year — while Obama and the Democrats want to allow the cuts for the wealthy to expire.

What they can't agree on is what constitutes “wealthy.”

Obama has long pushed to keep the lower rates for individuals earning less than $200,000 — and families earning less than $250,000 — annually. But Schumer, who represents many Wall Street fortunes and other wealthy New Yorkers, has advocated instead for a $1 million cut-off.

While House Democrats stayed true to Obama’s lower figures in their budget, Pelosi has repeatedly supported the $1 million threshold.

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“Let’s begin by getting rid of tax cuts for people making more than a million dollars a year. I’m not even saying $250,000. The president’s saying $250,000,” she told Charlie Rose in the first week of April. “A million and above. Who can argue with that?”

Then, on Wednesday, Pelosi doubled down on the $1 million figure, penning a letter to Boehner urging the Speaker to stage a vote on extending the tax breaks only for incomes below that level.

“We must ask the very wealthiest Americans to pay their fair share,” she wrote. “It is unacceptable to hold tax cuts for the middle class hostage to extending multibillion-dollar tax breaks for millionaires, Big Oil, special interests and corporations that ship jobs overseas.”

The proposal immediately caused a backlash from some liberals, on and off Capitol Hill, who argued the $1 million figure would sacrifice trillions of dollars in revenue at the expense of federal programs, mostly those targeting the poor.

Chuck Marr of the Center for Budget and Policy Priorities said Thursday that Pelosi’s move would “put tremendous pressure” on government programs that would have to be cut to pay for the tax breaks for those making over $250,000.

Durbin also said he disagrees with Pelosi's definition of “middle class.”

“I had a chance to vote for that [the $1 million threshold], and I didn’t. I still think 250 is the right number," Durbin said. "I respect Nancy’s position, and it may reflect her caucus. But within the Senate Democratic caucus, there are different points of view.”

Rebecca Thiess of the left-leaning Economic Policy Institute lobbed a harsher critique, saying Pelosi's high-profile endorsement of the $1 million figure is indication that “the Democratic leadership is now comfortable perpetuating the notion that taxpayers earning hundreds of thousands of dollars in annual income deserve a tax cut.

“Policy-wise this is definitely not something we want to see at all,” Thiess said. "The middle class has become completely lost in this debate; the conversation has now shifted to which strata of the very wealthy deserve a hefty tax cut.”

Citizens for Tax Justice’s Steve Wamhoff piled on, charging that Pelosi’s letter is deeply flawed as a negotiating strategy. He said the concession will not get Americans for Tax Reform President Grover Norquist or other conservatives to budge from their demand that all the Bush-era rates be extended.

“I do not think that this particular move is going to gain anything,” he said.

Boehner, for his part, has rejected the notion of voting separately on tax cuts for different income levels, vowing instead to extend all the cuts in one package.

“Tax hikes destroy jobs — especially an increase on the magnitude set for Jan. 1,” he said at an economic forum earlier this month. “Small businesses need to plan.”

The Democrats are well-aware of Boehner's intentions, but are hoping their request for separate votes will portray the Republicans as holding the middle-class cuts hostage to the benefits for the wealthy.

Sen. Bob CaseyBob CaseyDem lawmakers voice shock, outrage on Comey memo Ryan tweet on classified info resurfaces after bombshell Trump report Grassley rips ‘Nixonian’ talk about Comey firing: ‘Suck it up and move on’ MORE Jr. (D-Pa.), who supports the $1 million threshold, stressed the importance of adopting a strong, clean message as the debate rumbles on.

“Certainly, public policy isn’t always just about the substance of an issue,” said Casey, who is seeking a second term this fall. “Part of this is how to communicate to the American people in a pretty stressful time for them.”