Tax Hikes on the Rich: Will Dems Blink?

Don't rule out a one-year extension of all the Bush tax cuts -- even those for high incomers.

For more than two years, President Obama and the vast majority of Democrats have argued for extending and enlarging Bush’s middle class tax cuts while allowing rates to rise for those making more than $250,000 a year. Ask today, and that’s still the answer you get from every Democrat in a position of power. But as the Dec. 31 deadline approaches, don’t be surprised if Democrats cave and allow at least a one-year extension on all the Bush cuts.

This is one case where the parliamentary rules should give Democrats an advantage because if the Senate deadlocks and does nothing, all the tax rates would automatically rise for 2011 -- an outcome no one wants. That means Democrats could put a bill on the floor extending the lower rates just for middle incomers and dare the Republicans to block it. If Republicans do -- insisting they won’t vote for a bill that is a de facto rate hike on the rich -- Democrats would be able to go to the voters and blame the Republicans for a massive tax hike on the middle class.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Mark Willen
Senior Political Editor, The Kiplinger Letter