Some of the architects of the 1990s tax policy that President Barack Obama invokes as a model say taxes should be higher and reach deeper into the middle class than the president has proposed to solve a fiscal dilemma.
Taxes should be raised by $1.8 trillion over the next decade and capital gains should be taxed at 28 percent, up from the current 15 percent, according to a report released today by the Center for American Progress, a Washington group with ties to Democrats. Many deductions would be converted into credits, and taxes would rise by an average of $468 in 2017 for households earning between $100,000 and $250,000 a year, a group that Obama has largely pledged to shield from heavier burdens.
“By reforming our tax system, we do it in a progressive way and we raise the revenue that’s needed to run an effective government,” John Podesta, a co-author who was chief of staff under President Bill Clinton, told reporters on a conference call today.
The plan’s co-authors include Robert Rubin and Lawrence Summers, who each served as Treasury secretary for Clinton.
Also listed as co-authors are former Clinton administration members William Daley, who was Commerce secretary, and Evercore Partners Inc. (EVR:US) Chairman Roger Altman and Leslie Samuels, who were top officials at the Treasury Department. Daley and Summers also worked in the Obama administration, and Podesta is now chairman of the Center for American Progress. Another co-author is Antonio Weiss, global head of investment banking at Lazard, Ltd.
Their plan adds to the debate between the Obama administration and congressional Republicans over how to avert the so-called fiscal cliff, more than $600 billion in automatic spending cuts and tax increases scheduled to take effect in January. Lawmakers are trying to prevent a short-term shock to the economy and reach an agreement on long-term deficit reduction.
The proposal calls for a top income tax rate of 39.6 percent, the same as under Clinton and in Obama’s budget. It would repeal the alternative minimum tax, set the top estate tax rate at 48 percent, and raise corporate taxes by 4 percent while lowering the statutory rate.
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