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.

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

Sen. Charles SchumerCharles (Chuck) Ellis SchumerJewish Democratic congresswoman and veteran blasts Trump's 'disloyalty' comments Schumer says Trump encouraging anti-Semites Saagar Enjeti: Biden's latest blunder; Krystal Ball: Did Schumer blow our chance to beat McConnell? 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 Andrew BoehnerIsrael should resist Trump's efforts to politicize support Lobbyists race to cash in on cannabis boom Rising star Ratcliffe faces battle to become Trump's intel chief 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 DurbinRichard (Dick) Joseph DurbinSenate Democrats push Trump to permanently shutter migrant detention facility House panel investigating decision to resume federal executions To combat domestic terrorism, Congress must equip law enforcement to fight rise in white supremacist attacks MORE (Ill.) and Jack ReedJohn (Jack) Francis ReedSenate Democrats push for arms control language in defense policy bill What the gun safety debate says about Washington Senators ask for committee vote on 'red flag' bills after shootings MORE (R.I.) told The Hill on Thursday that Democrats should continue to follow the president's lead at $250,000. Sen. Sheldon WhitehouseSheldon WhitehouseSenate Democrats push Trump to permanently shutter migrant detention facility To cash in on innovation, remove market barriers for advanced energy technologies Democrats give cold shoulder to Warren wealth tax 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 Peter BegichAlaska political mess has legislators divided over meeting place Former GOP chairman Royce joins lobbying shop Lobbying world MORE (Alaska) and Robert MenendezRobert (Bob) MenendezPelosi warns Mnuchin to stop 'illegal' .3B cut to foreign aid House passes temporary immigration protections for Venezuelans Senate panel advances bipartisan bill to lower drug prices amid GOP blowback 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 MerkleyJeffrey (Jeff) Alan MerkleyDemocratic senator and top Trump immigration official argue over asylum claims on Twitter Senate Democrats push Trump to permanently shutter migrant detention facility Senate Dem seeks answers from DHS on reports of pregnant asylum seekers sent back to Mexico 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 Emiel FeinsteinTrailer shows first look at Annette Bening as Dianne Feinstein Trump administration urges Congress to reauthorize NSA surveillance program The Hill's Morning Report - More talk on guns; many questions on Epstein's death 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 Andrew BoehnerIsrael should resist Trump's efforts to politicize support Lobbyists race to cash in on cannabis boom Rising star Ratcliffe faces battle to become Trump's intel chief 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.

“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 CaseyRobert (Bob) Patrick CaseyThe Hill's Morning Report - Progressives, centrists clash in lively Democratic debate Democrats press Trump Treasury picks on donor disclosure guidelines Pennsylvania school district turns down local businessman's offer to pay off student lunch debts 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.”