“What we won’t do is raise tax rates, and kiss goodbye more than 700,000 good jobs in the process,” said Senator McConnell in a floor statement on Nov. 15.
Carefully parsed, these statements leave open the possibility that Republicans would agree to increase revenues from the wealthy through a cap on deductions or some other non-marginal-rate-increase means. As we’ve written, this is something GOP presidential nominee Mitt Romney proposed as part of his own tax reform package. That might make it easier for GOP backbenchers to accept.
(Yes, Obama in his press conference Thursday replied that it’s hard to reach his goal of $1.6 trillion in new revenue, as part of a 10-year, $3 trillion deficit-reduction package, without raising rates on top earners. But that $1.6 trillion is his goal, not the GOP’s, so presumably it’s open to negotiation, too.)
Given the results of the election, many in the GOP realize that they might have a tough time resisting new taxes on high-income earners. Some conservatives outside the party, such as the Weekly Standard’s William Kristol, have publicly come out and said Republicans should accept some tax hikes as the price for getting a real deficit-cutting deal.
But the words of the GOP congressional leaders also might be read in another way: that they’d reject any increase in taxes per se, but they’d accept new revenues stemming from what they predict would be the increased economic activity spurred by wide-ranging tax code reform.