By Bernie Becker - 12/04/12 11:00 AM EST
Lawrence Summers and Robert Rubin, both Treasury secretaries under Clinton, are among the authors of the plan, as is John Podesta, who founded CAP and served as Clinton’s chief of staff. Podesta was also a co-chairman of Obama’s transition team after the 2008 election, and Summers served as a top economic adviser at the start of President Obama’s time in the Oval Office.
With $1.8 trillion in revenues, the Center for American Progress plan is in the ballpark of President Obama’s most recent fiscal-cliff offer to Republicans, which called for $1.6 trillion in new revenues. The president’s fiscal commission, chaired by Erskine Bowles and Alan Simpson, also raised $1.8 trillion in revenue when compared to current policy.
Republican leaders in the House on Monday offered $800 billion in revenue, in a framework based on a plan Bowles — also a former Clinton chief of staff — laid out to the deficit-reducing supercommittee last year.
CAP says its plan would raise revenue progressively, and also include around $100 billion in temporary tax cuts to further stimulate the economy. Those making north of $1 million per year would see an average tax increase of more than $150,000 under the framework, while those earning under six figures would see, on average, a slight tax cut.
Under the CAP plan, the top rate on capital gains would go to 28 percent — almost twice the current 15 percent rate. Dividends, also currently taxed at 15 percent, would be taxed as ordinary income, putting the top rate at close to 40 percent.
Some businesses and business groups are lobbying hard to keep capital gains rates where they are, and dividend-issuing companies are looking for that rate to stay even with capital gains.
CAP would also make estate tax parameters less generous than either Republicans or the White House are calling for: a $2 million exemption, paired with a 48 percent top rate.
And the plan would in many cases pare back popular tax breaks like those for charitable giving and mortgage interest. CAP would implement a standard income tax credit ($5,000 for couples) and, in most cases, an 18 percent itemized credit. Charitable contributions would receive a credit of up to 28 percent.
Charitable groups have pushed back in recent years on an administration proposal that would cap the current deduction used for charitable contributions at 28 percent. Housing groups have said that offering less of a tax incentive for mortgage interest would hurt a market that is now starting to see signs of life.