Schumer pushes tax hikes on wealthy

WASHINGTON -- Sen. Charles Schumer (D-N.Y.) said yesterday that tax rates on the wealthy should go up and that tax breaks benefiting the middle class must be preserved.

The move by Schumer, the No. 3 Democrat in the Senate, is a direct challenge to a traditional tax reform model that lowers tax rates for all and finances the cuts through a broad assault on tax breaks and loopholes. It came less than a month before Election Day.

Schumer rallied behind longstanding tax plans by President Barack Obama to hike rates on the wealthy while blasting as unworkable the more traditional tax reform model pushed by GOP nominee Mitt Romney -- and some Democrats.

Schumer said efforts to replicate tax reform along the lines of a 1986 effort backed by President Ronald Reagan and prominent Democrats would end up increasing taxes on the middle class and worsen the recent rise in income inequality. That's because the value of big tax deductions and credits like breaks for mortgage interest and college savings could easily exceed the savings from lower tax rates while the wealthy would benefits from rates cuts that exceed the value of their deductions.

He said such an approach "is almost guaranteed to give middle-income earners the short end of the stick." That's because "in order to raise enough money to both reduce rates and cut the deficit, you would need to slash deductions and credits on a far greater scale than we ever did in 1986. Middle-income earners would not be spared."

Schumer also criticized the bipartisan approach taken by Obama's deficit commission, which is broadly modeled on the 1986 effort, but also siphons off about $2 trillion in revenue over a decade to curb the deficit.

A bipartisan group of eight senators seeking to build on the Obama commission is meeting this week in the Washington suburbs to see whether it can make progress toward an agreement.