Tax Battle Looms

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Tuesday, September 14, 2010 - 8:52am

President Obama faces fight over planned repeal of Bush-era tax cuts.

To try to save his plan to hike taxes on the well-off, but leave the rates alone for everyone else, President Obama pleaded his case in a backyard in Fairfax, Virginia on Monday.

Virginia Democratic Senator Jim Webb and at least three more Senate Democrats, along with Independent Joe Lieberman oppose the Obama plan.

Senate Minority Leader Mitch McConnell tried to capitalize on the rift by introducing legislation ensuring that no one will pay a higher tax rate in 2011 than 2010.

There is also debate over whether taxing the wealthy would help or hurt the recovery.

"The rich are a large share, a very large share upsize share, of consumption. If they cut back on
their consumption, that's a drag on the economy overall, which is not what we need right now," argues conservative economist Mark Calabria.

President Obama and his supporters point out that the tax rate on the richest Americans will revert to the same level it was at during the Clinton administration, when the economy was booming.

If there is no vote in Congress, rates rise on everyone, making the debate a a game of chicken.

The president and the Democrats still hope "Tax the Rich" is a slogan and a plan that will help them in November.
 

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