Schumer: Deficit deal must raise tax rates on high-income families

Sen. Charles Schumer (N.Y.), the Senate Democrats’ chief political strategist, on Wednesday rejected any possible deficit-reduction deal that does not raise tax rates on the wealthy.

Republican leaders have expressed willingness to consider new revenues as part of a compromise to avert the fiscal cliff, but they have rejected raising income tax rates.

{mosads}Schumer said the government cannot raise the $1.5 trillion in new revenues President Obama has called for unless the top rate rises from 35 percent to 39.6 percent.

He said Democrats would not accept any proposal that caps tax deductions for families earning below $250,000 a year.

“The fact of the matter is mathematically there is not enough revenues to get us to the $1.5 trillion if you lower the top rate below 39.6,” Schumer said. 

“You just can’t do it unless you want to cut tax expenditures, you want to cut tax breaks, traditional tax expenditures, like mortgage, charitable, state and local for people below [$250,000], and we will not do that.”

Last week, speaking at a breakfast sponsored by The Christian Science Monitor, Schumer said enough tax revenues could be raised by eliminating deductions for families earning above $250,000. 

But he warned it would be difficult. That was before reports this week stating Obama has set a target of raising an additional $1.5 trillion to $1.6 trillion in new revenues.

Schumer now says the president’s target can only be met by raising income tax rates on the nation’s highest earners. He said it could be reached by a combination of eliminating tax breaks and raising rates for families earning above $250,000 annually.

“There’s not enough revenues if you just rely on that,” he said of proposals only to cap or eliminate tax deductions for the wealthy. “As an addition to money you gain by raising the top rate, yes, but otherwise not.

“What he has said, which is a key here is, ‘We won the election on raising the rates for the highest income people,'” Schumer said, paraphrasing Obama to explain the Democrats’ leverage in tax talks. 

Schumer in the past has proposed raising taxes only on families making over $1 million a year. But he said Wednesday that offer is now moot.

“No,” he said, when asked about the possibility of protecting families earning between $250,000 and $1 million from a tax hike. 

“I offered a million to the Republicans two years ago. They rejected it. We campaigned on 250. That was the Democratic position. We won on it.”