Some Democrats mull deal on wealthy tax rate

Politico

President Barack Obama has made his tax position abundantly clear: Let the tax rates for the wealthiest Americans expire at year's end.

But on Capitol Hill, some in his own party are ready to make a deal.

Senate Majority Whip Dick Durbin of Illinois is floating a six-month extension of current rates, combined with budget cuts, so lawmakers have time to reach a grand bargain deal early next year.

Sen. Claire McCaskill of Missouri and other Democrats are open to a temporary extension of the top individual tax rate if Republicans agree to raise revenue in other parts of the Tax Code.

Some liberals, such as New Jersey Rep. Bill Pascrell, aren't ruling out extending the current rates if the GOP agrees to sweeteners like adjusting the alternative minimum tax to lessen the hit on middle-class filers or extending dozens of lapsed business tax breaks.

The Democrats' openness to extend tax cuts for upper-income Americans shows how legislative reality on Capitol Hill can clash with the presidential campaign. Obama has attacked Mitt Romney for seeking more tax breaks for individuals earning more than $200,000 and families with income above $250,000.

But with Congress prepared to punt its unfinished business until after the elections, some Democrats realize they ultimately may have no choice but to compromise to avoid the fiscal cliff at year's end.

The talk is only in its nascent stages, given that the lame-duck negotiations will be dictated by whoever wins the White House and that most House and Senate Republicans have refused to budge from their pledge to oppose raising any revenue from the Tax Code.

The White House is adamantly opposed to any extension of the current tax rates for families who make more than $250,000 a year. Spokeswoman Amy Brundage said Obama would veto an extension of the tax cuts for high earners, saying the country can't afford a "trillion-dollar tax cut for millionaires and billionaires."

But in interviews with Politico, some liberals and moderate Democrats appear open to cutting a deal that includes a six-month extension of all the income tax rates -- so long as Congress agrees to raise revenue in other areas, such as closing certain tax deductions.