The richest Americans might find lumps of coal in their stockings on Christmas morning and, if not that, then they can definitely anticipate big hangovers on New Year’s Day.
The metaphorical coal lumps and hangovers will be thanks to President Obama and Speaker of the House John Boehner, who are either going to strike a deal in the next few days to allow taxes to go up for the wealthy or let it happen automatically when the George W. Bush-era tax cuts expire Jan. 1. But one need not feel too sorry for these people because some of them actually own coal mines, others own distilleries and many, many more have wine cellars under their palatial homes. They also own yachts and ski chalets and beach homes and, as in the case of a certain failed presidential candidate, elevators for their luxury cars.
A few of them are the very people who deserve blame for the financial disaster of 2008 that hit the rest of Americans so hard, with the exception of all those other rich folk who skated through the long recession with portfolios and bank accounts bigger than ever. If they are forced back to paying the amount of federal taxes they paid in the 1990s, it will be like a tiny bump in the road under their golf carts rolling to the next green.
The unanswered question is simply how many of the rich will have to pay more. If there is no agreement on avoiding the so-called fiscal cliff, everyone with an income higher than $250,000 will get a boost in their tax bill. However, in negotiations for a budget deal, the president has shown a willingness to spare anyone earning less than $400,000. Boehner’s counter offer would set the line at $1 million, a compromise that has infuriated Rush Limbaugh, tea party purists, the Heritage Foundation, the Club for Growth and the most conservative members of the House Republican Caucus.
Surprisingly, Grover Norquist, the mandarin of the anti-tax movement, has given his approval to Boehner’s higher tax rate for millionaires on the curious reasoning that, because the speaker’s proposal simply allows the rate to bump back up on the coming expiration day, it is not really a tax increase. Funny, he is not saying this about the automatic tax hikes that would hit everyone, including the middle class, if Boehner and Obama fail to strike a deal.
In reality, if we are truly serious about bringing down the deficit that so worries Republicans and most Democrats, all of us should pay a little more. Letting rates go up only for rich people will help, but bringing the middle class back to the level paid during Bill Clinton’s presidency would bring in far more money. There is a reason these taxes are due to expire; when passed, everyone knew such a huge dip in revenue would very likely drive up the deficit.
That has come to pass. But now, there is really no chance the tax cut will be allowed to disappear for anyone making less than a quarter-million bucks. Even if the tax break lapses as 2013 dawns, it will be quickly restored by a frantic Congress terrified of wrathful voters -- the same voters who, by big majorities, oppose any meaningful cuts to government programs or elimination of popular tax loopholes. Regarding steps to lower the deficit, the only thing a majority of voters do agree on is that rich people should pay more.
And so they most certainly will.