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Flat tax rate one proposal to solve fiscal cliff problem

By Richard Piatt | Posted - Dec 5th, 2012 @ 6:51pm



WASHINGTON — There are 25 days and counting until the nation hits the "fiscal cliff," and there's still no resolution in sight. And some of the ideas to resolve the nation's debt may be complicating the issue.

House Republican leaders on Wednesday told members they were free to leave because they have nothing to vote on. It's a way to send their latest message: Your move, Mr. President.

"We need a response from the White House," said Speaker of the House John Boehner. "We can't sit here and negotiate with ourselves."

But key players aren't talking in the same room. In fact, the big news Wednesday evening was that congressional aides say Boehner and the president actually spoke in a phone call.

Associated Press-GfK poll:
Tax cuts:

  • Should expire on earnings over $250K but continue for lower incomes: 48 percent
  • Should continue for everyone: 32 percent
  • Should end for all: 13 percent

  • Republicans for renewal: 48%, down from 74% in 2010
  • Democrats against renewal: 61%, down only slightly from 2010.

Tackling the deficit:

  • 46% favor cutting government services
    • But support has dropped from 56% in Feb. 2012, and 62% in March 2011.
  • 30% favor raising taxes
  • Just over half say they doubt Obama will be able to reduce budget deficits.
  • In his first days in office in 2009, more people than not thought he would be able to do so.

Benefits:

  • By 48 percent to 40 percent, more oppose proposals to gradually raise the eligibility age for Medicare from 65.
  • Only 3 in 10 support slowing the growth of annual Social Security benefits.
  • Sentiments about culling savings from Social Security and Medicare were similar among Democrats and Republicans.

  • People ages 30 to 64 were more likely to oppose raising the Medicare eligibility age.
  • People ages 50 to 64 were more likely to oppose slowing the growth of Social Security benefits.

Defense:

  • More people oppose than favor cutting military spending.
  • Just over half of Democrats favor cutting defense; two-thirds of Republicans oppose it.

Partisanship:

  • 33% are Democrats
  • 23% are Republicans
  • 27% are independents
  • The numbers are about the same over the past six months.

"The president is ready, willing and able, waiting to be able to sit down and seriously negotiate this, but they have to be willing to come to the table with specifics," said Sen. Debbie Stabenow, D-Michigan.

Rep. Kevin McCarthy, House Majority Whip, said the next 72 hours are critical.

"If he sits back and continues to play politics, that'll give you your answer of where we're going," he said.

The sticking point that remains: whether to raise tax rates for the wealthiest 2 percent of Americans.

Even with a heavy task and deadline ahead, members of Congress leave the Capitol for a long weekend. Leadership and the White House are barely talking to each other.

"It's up to the president to engage in this process," Boehner said, compared to Pres. Barack Obama: "We can probably solve this in about a week. It's not that tough."

Utah Senator Mike lee is among these conservatives who say there's something even easier: a 'flat tax' that's fair; and that everyone understands, unlike the tax laws right now.

Lee stood with Steve Forbes and a group of conservative congressman for that proposal this week.

Changing the tax system is not on the table for either the White House or Congressional leaders, but Lee and others say it should be. Specifically, they're pushing for a flat tax: one tax rate for everyone.

Right now, Lee says, most Americans aren't sure how much they pay in taxes.

"This is a big problem," Lee said. "We should all know exactly what it is that our federal government costs us. If we move to a flat rate, everyone would know."

But the idea may serve to complicate the fiscal cliff debate. A flat rate could mean tax hikes for some, and anti-tax purist Senator Jim DeMint, R-S.C., is already upset with Republican House leaders over entertaining anything even resembling a rate hike.

"Republicans should not be conceding that the federal government needs more money, negotiating with ourselves, and treating the president's proposal like it's serious," he said.

It illustrates the political labyrinth involved in solving the fiscal cliff — when more ideas aren't necessarily welcome in these tense times.

Traditionally, a plurality of Americans oppose a flat tax, with the number of Democrats opposing a flat tax far outnumbering the number of Republicans opposing it.

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